exhibit105-3.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

     

    ANY
TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE,
INCLUDING SECTIONS 3(c)(iv), 4(c)(iv) AND 21(a) HEREOF.  THE PRINCIPAL
AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTIONS 3(c)(iv) AND 4(c)(iv) OF THIS NOTE.

     

    Earth
Biofuels, Inc.

     

    Amended
and Restated Senior Secured Exchangeable Convertible Note

     

    
      	
              Original
      Issuance Date:  July 24, 2006

              Amendment
      Date:  June 25, 2008

            	
              Original
      Principal Amount: U.S.
      $10,000,000.00

            


    

    


    FOR VALUE RECEIVED, Earth
Biofuels, Inc., a Delaware corporation (the "Company"), hereby promises to
pay to the order of RADCLIFFE SPC, LTD. FOR AND ON BEHALF OF THE CLASS A
SEGREGATED PORTFOLIO or registered assigns ("Holder") the amount set out
above as the Original Principal Amount (as reduced pursuant to the terms hereof
pursuant to redemption, conversion, exchange or otherwise, and as increased to
include the amount of any Capitalized Interest (as defined below), the "Principal") when due, whether
upon the Maturity Date (as defined below), acceleration, redemption or otherwise
(in each case in accordance with the terms hereof) and to pay interest ("Interest") on any outstanding
Principal at the applicable Interest Rate from the Redemption Expiration Date
(as defined below) until the same becomes due and payable, whether upon an
Interest Date (as defined below), any Redemption Date or the Maturity Date or
acceleration, conversion, redemption, exchange or otherwise (in each case in
accordance with the terms hereof).  This Amended and Restated Senior
Secured Exchangeable Convertible Note (including all Amended and Restated Senior
Secured Exchangeable Convertible Notes issued in exchange, transfer or
replacement hereof, this "Note") amends, supplements,
modifies and completely restates and supersedes the Senior Convertible Note,
dated as of July 25, 2006 (the "Existing Note"), issued by the
Company to the Holder in the amount of $5,000,000, but shall not, except as
specifically amended hereby or as set forth in the Amendment and Exchange
Agreements (as defined below), constitute a release, satisfaction or novation of
any of the obligations under the Existing Note or any other Transaction Document
(as defined in the Amendment and Exchange Agreements (as defined
below).  This Note is one of an issue of Amended and Restated Senior
Secured Exchangeable Convertible Notes issued pursuant to the Amendment and
Exchange Agreements dated as of date set out above as the Amendment Date (the
"Amendment Date") by and
between each of the Buyers (as defined in the Amendment and Exchange Agreements)
and the Company (individually, with respect to any Buyer, the "Amendment and Exchange
Agreement" and collectively, with respect to all Buyers, the "Amendment and Exchange
Agreements") (collectively, the "Notes" and such other Amended
and Restated Senior Secured Exchangeable

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Convertible
Notes, the "Other Notes").  Certain
capitalized terms used herein are defined in Section 31.

     

    (1)           PAYMENTS OF
PRINCIPAL.  On the Maturity Date, the Company shall pay to the
Holder an amount in cash representing all outstanding Principal, accrued and
unpaid Interest and accrued and unpaid Late Charges on such Principal and
Interest.  The "Maturity Date" shall be June 25, 2010
(the "Stated Maturity
Date"), as may be extended at the option of the Holder (i) in the event
that, and for so long as, an Event of Default (as defined in Section 5(a)) shall
have occurred and be continuing on the Maturity Date (as may be extended
pursuant to this Section 1) or any event shall have occurred and be continuing
on the Maturity Date (as may be extended pursuant to this Section 1) that with
the passage of time and the failure to cure would result in an Event of Default
and (ii) through the date that is ten (10) Business Days after the consummation
of a Change of Control in the event that a Change of Control is publicly
announced or a Change of Control Notice (as defined in Section 6(b)) is
delivered prior to the Maturity Date.  Other than as specifically
permitted by this Note, the Company may not prepay any portion of the
outstanding Principal, accrued and unpaid interest or accrued and unpaid Late
Charges on Principal and Interest, if any.  Notwithstanding any
provision of this Section 1 to the contrary, the Holder may at any time and from
time to time at its option and in its sole discretion by delivering a written
notice to the Company at any time while this Note is outstanding, elect to have
the payment of all or any portion of the Principal and Interest, if any, payable
on the Stated Maturity Date deferred (such amount deferred, the "Maturity Deferral Amount") to
any date that is not later than five (5) years after the Stated Maturity Date,
which date shall thereafter be the "Maturity Date" for all purposes
hereunder.  Any notice delivered by the Holder pursuant to this
Section 1 shall set forth (i) the Maturity Deferral Amount and (ii) the date
that such Maturity Deferral Amount shall now be payable.

     

    (2)           INTEREST; INTEREST
RATE.  Interest on this Note shall commence accruing on the
Amendment Date and shall be computed on the basis of a 360-day year comprised of
twelve (12) thirty (30) day months and shall be payable in arrears for each
Calendar Quarter on the first day of the succeeding Calendar Quarter during the
period beginning on the Amendment Date and ending on, and including, the
Maturity Date (each, an "Interest Date") with the first Interest
Date being July 1, 2009.  Interest shall be payable on each Interest
Date, to the record holder of this Note on the applicable Interest Date, and to
the extent that any Principal amount of this Note is converted prior to such
Interest Date, accrued and unpaid Interest with respect to such converted
Principal amount and accrued and unpaid Late Charges with respect to such
Principal and Interest shall be paid on the Conversion Date (as defined below)
to the record holder of this Note on the applicable Conversion Date, in cash
("Cash Interest");
provided however, that the Company may, at its option following notice to the
Holder elect pursuant to an Interest Election Notice (as defined below) to
capitalize such Interest on and as of each Interest Date by adding it to the
then outstanding Principal of this Note (the "Capitalized
Interest").  The Company shall deliver a written notice (each,
an "Interest Election
Notice") to each holder of the Notes on or prior to the Interest Notice
Due Date (the date such notice is delivered to all of the holders, the "Interest Notice Date") which
notice (1) either (A) confirms that the Company shall pay Interest as Cash
Interest or (B) elects to pay Interest as Capitalized Interest or a combination
of Cash Interest and Capitalized Interest and specifies the amount of Interest
that shall be paid as Cash Interest and Capitalized Interest.  From
and after the occurrence and during the continuance of an Event of Default, the
Interest Rate

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    shall be
increased to the rate which is the lesser of (x) twenty-eight percent (28.0%),
or (y) the highest rate permitted by law to accrue under this
Note.  In the event that such Event of Default is subsequently cured,
the adjustment referred to in the preceding sentence shall cease to be effective
as of the date of such cure; provided that the Interest as calculated and unpaid
at such increased rate during the continuance of such Event of Default shall
continue to apply to the extent relating to the days after the occurrence of
such Event of Default through and including the date of cure of such Event of
Default.

     

    (3)           CONVERSION OF
NOTES.  This Note shall be convertible into shares of the
Company's common stock, par value $0.001 per share (the "Common Stock"), on the terms
and conditions set forth in this Section 3.

     

    (a)           Conversion
Right.  Subject to the provisions of Section 3(d), at any time
or times on or after the Amendment Date, the Holder shall be entitled to convert
any portion of the outstanding and unpaid Conversion Amount (as defined below)
into fully paid and nonassessable shares of Common Stock in accordance with
Section 3(c), at the Conversion Rate (as defined below).  The Company
shall not issue any fraction of a share of Common Stock upon any
conversion.  If the issuance would result in the issuance of a
fraction of a share of Common Stock, the Company shall round such fraction of a
share of Common Stock up to the nearest whole share.  The Company
shall pay any and all transfer, stamp and similar taxes that may be payable with
respect to the issuance and delivery of Common Stock upon conversion of any
Conversion Amount.

     

    (b)           Conversion
Rate.  The number of shares of Common Stock issuable upon
conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion
Rate").

     

    (i)           "Conversion Amount" means the
portion of the Principal to be converted, redeemed or otherwise with respect to
which this determination is being made.

     

    (ii)           "Conversion Price" means, as of
any Conversion Date (as defined below) or other date of determination, $0.25,
subject to adjustment as provided herein; provided, further that, on each
Automatic Adjustment Date, the then current Conversion Price shall be reduced to
the lower of (i) the then current Conversion Price and (ii) the Automatic
Adjustment Reset Price as of such applicable Automatic Adjustment
Date.

     

    (c)           Mechanics of
Conversion.

     

    (i)           Optional
Conversion.  To convert any Conversion Amount into shares of
Common Stock on any date (a "Conversion Date"), the Holder
shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior
to 11:59 p.m., New York Time, on such date, a copy of an executed notice of
conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to the
Company and (B) if required by Section 3(c)(iii), surrender this Note to a
nationally recognized overnight delivery service for delivery to the Company (or
an indemnification undertaking with respect to this Note in the case of its
loss, theft or destruction).  On or before the first (1st)
Business Day following the date of receipt of a

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Conversion
Notice, the Company shall transmit by facsimile a confirmation of receipt of
such Conversion Notice to the Holder and the Company's transfer agent (the
"Transfer
Agent").  On or before the third (3rd)
Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (1)
(X) provided that the Transfer Agent is participating in the Depository Trust
Company's ("DTC") Fast
Automated Securities Transfer Program, credit such aggregate number of shares of
Common Stock to which the Holder shall be entitled to the Holder's or its
designee's balance account with DTC through its Deposit Withdrawal Agent
Commission system or (Y) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, issue and deliver to the address as
specified in the Conversion Notice, a certificate, registered in the name of the
Holder or its designee, for the number of shares of Common Stock to which the
Holder shall be entitled which certificates shall not bear any restrictive
legends; and (2) (X) pay to the Holder in cash an amount equal to the accrued
and unpaid Interest on the Conversion Amount up to and including the Conversion
Date, (Y) deliver to the Holder an Interest Election Notice electing to treat
the accrued and unpaid Interest on the Conversion Amount as Capitalized Interest
or (Z) credit to the Holder's balance account with DTC, or issue and deliver a
certificate to the Holder, for an aggregate amount of shares of Common Stock
equal to the result obtained by dividing (I) the accrued and unpaid Interest on
the Conversion Amount up to and including the Conversion Date by (II) the
applicable Conversion Price set forth in the Conversion Notice.  If
this Note is physically surrendered for conversion as required by Section
3(c)(iii) and the outstanding Principal of this Note is greater than the
Principal portion of the Conversion Amount being converted, then the Company
shall as soon as practicable and in no event later than three (3) Business Days
after receipt of this Note and at its own expense, issue and deliver to the
holder a new Note (in accordance with Section 21(d)) representing the
outstanding Principal not converted.  The Person or Persons entitled
to receive the shares of Common Stock issuable upon a conversion of this Note
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on the Conversion Date.

     

    (ii)           Company's Failure to Timely
Convert.  If within three (3) Trading Days after the Company's
receipt of the facsimile copy of a Conversion Notice the Company shall fail to
issue and deliver a certificate to the Holder or credit the Holder's balance
account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), and if
on or after such Trading Day the Holder purchases (in an open market transaction
or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of
Common Stock issuable upon such conversion that the Holder anticipated receiving
from the Company (a "Buy-In"), then the Company
shall, within three (3) Business Days after the Holder's request and in the
Holder's discretion, either (i) pay cash to the Holder in an amount equal to the
Holder's total purchase price (including brokerage commissions and other out of
pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which
point the Company's obligation to deliver such certificate (and to issue such
Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver
to the Holder a certificate or certificates representing such Common Stock and
pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common Stock, times (B)
the Closing Bid Price on the Conversion Date.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (iii)           Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion of
any portion of this Note in accordance with the terms hereof, the Holder shall
not be required to physically surrender this Note to the Company unless (A) the
full Conversion Amount represented by this Note is being converted or (B) the
Holder has provided the Company with prior written notice (which notice may be
included in a Conversion Notice) requesting reissuance of this Note upon
physical surrender of this Note.  The Holder and the Company shall
maintain records showing the Principal, Interest and Late Charges converted and
the dates of such conversions or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of this Note upon conversion.

     

    (iv)           Pro Rata Conversion;
Disputes.  In the event that the Company receives a Conversion
Notice from more than one holder of Notes for the same Conversion Date and the
Company can convert some, but not all, of such portions of the Notes submitted
for conversion, the Company, subject to Section 3(d), shall convert from each
holder of Notes electing to have Notes converted on such date a pro rata amount
of such holder's portion of its Notes submitted for conversion based on the
principal amount of Notes submitted for conversion on such date by such holder
relative to the aggregate principal amount of all Notes submitted for conversion
on such date.  In the event of a dispute as to the number of shares of
Common Stock issuable to the Holder in connection with a conversion of this
Note, the Company shall issue to the Holder the number of shares of Common Stock
not in dispute and resolve such dispute in accordance with Section
26.

     

    (d)           Limitations on
Conversions: Beneficial
Ownership.  The Company shall not effect any conversion of this
Note or otherwise issue shares of Common Stock pursuant to Section 3(c) hereof
or Sections 9 or 10 hereof, and the Holder of this Note shall not have the right
to convert any portion of this Note pursuant to Section 3(a), to the extent that
after giving effect to such conversion, the Holder (together with the Holder's
affiliates) would beneficially own in excess of 1.247% (the "Maximum Percentage") of the
number of shares of Common Stock outstanding immediately after giving effect to
such conversion.  For purposes of the foregoing sentence, the number
of shares of Common Stock beneficially owned by the Holder and its affiliates
shall include the number of shares of Common Stock issuable upon conversion of
this Note with respect to which the determination of such sentence is being
made, but shall exclude the number of shares of Common Stock which would be
issuable upon (A) conversion of the remaining, nonconverted portion of this Note
beneficially owned by the Holder or any of its affiliates and (B) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any Other Notes or warrants) subject
to a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Holder or any of its
affiliates.  Except as set forth in the preceding sentence, for
purposes of this Section 3(d), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934
Act").  For purposes of this Section 3(d), in determining the
number of outstanding shares of Common Stock, the Holder may rely on the number
of outstanding shares of Common Stock as reflected in (x) the Company's most
recent Form 10-KSB, Form 10-QSB or Form 8-K, as the case may be (y) a more
recent public announcement by the Company or (z) any other notice by the Company
or the Transfer Agent setting forth the number of shares of Common Stock
outstanding.  For any reason at any time, upon the written request of
the Holder, the Company shall within one (1) Business Day confirm in writing to
the Holder the number of shares of

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Common
Stock then outstanding.  In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or
exercise of securities of the Company, including this Note, by the Holder or its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.  By written notice to the Company, the
Holder may increase or decrease the Maximum Percentage to any other percentage
not in excess of 4.99% specified in such notice; provided that (i) any such
increase will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company, and (ii) any such increase or
decrease will apply only to the Holder and not to any other holder of
Notes.

     

    (4)           EXCHANGE OF
NOTES.  In addition to the rights of the Holder under Section 3
hereof, at any time after the consummation of the Share Exchange (as defined in
the Amendment and Exchange Agreements), this Note shall be exchangeable into the
PNG Shares (as defined in the Amendment and Exchange Agreements) on the terms
and conditions set forth in this Section 4.

     

    (a)           Exchange
Right.  Subject to the provisions of Section 4(d), at any time
or times on or after the consummation of the Share Exchange, the Holder shall be
entitled to exchange any portion of the outstanding and unpaid Exchange Amount
(as defined below) into fully paid and nonassessable shares of PNG Shares in
accordance with Section 4(c), at the Exchange Rate (as defined
below).  The Company shall not deliver any fraction of a share of PNG
Shares upon any exchange.  If the delivery would result in the
transfer of a fraction of a share of PNG Shares, the Company shall round such
fraction of a share of PNG Shares up to the nearest whole share.  The
Company shall pay any and all taxes that may be payable with respect to the
transfer and delivery of PNG Shares upon exchange of any Exchange Amount for PNG
Shares.

     

    (b)           Exchange
Rate.  The number of shares of PNG Shares transferable upon
exchange of any Exchange Amount pursuant to Section 4(a) shall be determined by
dividing (x) such Exchange Amount by (y) the Exchange Price (as defined below)
(the "Exchange
Rate").

     

    (i)           "Exchange Amount" means the
portion of the outstanding Principal to be exchanged with respect to which this
determination is being made.

     

    (ii)           "Exchange Price" means $10.00,
subject to adjustment as provided herein.

     

    (c)           Mechanics of
Exchange.

     

    (i)           Optional
Exchange.  To exchange any Exchange Amount into shares of PNG
Shares on any date (an "Exchange Date"), the Holder
shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior
to 11:59 p.m.,  New York Time, on such date, a copy of an executed
notice of exchange in the form attached hereto as Exhibit II (the "Exchange Notice") to the
Company, (B) if required by Section 4(c)(iii), surrender this Note to a common
carrier for delivery to the Company as soon as practicable on or following such
date (or an indemnification undertaking with respect to this Note reasonably
satisfactory to the

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Company
in the case of its loss, theft or destruction) and (C) deliver to the transfer
agent for LNG (the "LNG
Transfer Agent") a copy of such Exchange Notice along with the original
stock certificate held by the Holder in accordance with the Security Documents
evidencing the Holder's pro rata allocation of the PNG Shares.  On or
before the first (1st)
Business Day following the date of receipt by the Company of an Exchange Notice,
the Company shall transmit by facsimile a confirmation of receipt of such
Exchange Notice to the Holder and the LNG Transfer Agent.  On or
before the second (3rd)
Business Day following the date of receipt by the Company of an Exchange Notice
(the "LNG Share Delivery
Date"), the Company shall (1) use its reasonable best efforts to cause
LNG or the LNG Transfer Agent to (X) transfer and deliver to the address as
specified in the Exchange Notice, a certificate, registered in the name of the
Holder or its designee, for the number of shares of PNG Shares to which the
Holder shall be entitled, or (Y) provided that the LNG Transfer Agent is
participating in DTC Fast Automated Securities Transfer Program and such shares
of PNG Shares, credit such aggregate number of shares of PNG Shares to which the
Holder shall be entitled certificates shall not bear any restrictive legends to
the Holder's or its designee's balance account with DTC through its Deposit
Withdrawal Agent Commission system; and (2) either (A) pay to the Holder in cash
an amount equal to the accrued and unpaid Interest on the Exchange Amount up to
and including the Exchange Date (the "Exchange Interest Amount") or
(B) deliver a number of shares of PNG Shares equal to the Exchange Interest
Amount divided by the Interest Exchange Conversion Price.  Upon any
such transfer of any PNG Shares to the Holder, the Holder shall have good and
marketable title to such shares, free and clear of any liens, encumbrances,
restrictions, rights of first refusal or rights of any other Person and such
shares of PNG Shares shall be unrestricted and freely tradable on the Principal
Market without any delivery or other requirements whatsoever and without the
need for registration under the Securities Act or any state securities
laws.  If this Note is physically surrendered for exchange as required
by Section 4(c)(iii) and the outstanding Principal of this Note is greater than
the Principal portion of the Exchange Amount being exchanged, then the Company
shall as soon as practicable and in no event later than three (3) Business Days
after receipt of this Note and at its own expense, issue and deliver to the
holder a new Note (in accordance with Section 21(d)) representing the
outstanding Principal not exchanged.  The Company shall use its
reasonable best efforts to cause LNG and the LNG Transfer Agent to treat for all
purposes the Person or Persons entitled to receive the shares of PNG Shares
issuable upon an exchange of this Notes as the transferee or transferees of such
shares of PNG Shares on the Exchange Date.

     

    (ii)           Company's Failure to Timely
Exchange.  If the Company shall fail to transfer and deliver to
the Holder or have credited to the Holder's balance account with DTC the number
of shares of PNG Shares to which the Holder is entitled (provided that the
Holder has delivered its original stock certificate evidencing the Holder's pro
rata allocation of the PNG Shares to the LNG Transfer Agent as required by
Section 4(c)(i)) upon exchange of any Exchange Amount on or prior to the date
which is three (3) Trading Days after the Exchange Date (an "Exchange Failure"), then (A)
the Company shall pay damages to the Holder for each date of such Exchange
Failure in an amount equal to 1.0% of the product of (I)
the sum of the number of shares of PNG Shares not transferred and delivered to
the Holder on or prior to the LNG Share Delivery Date and to which the Holder is
entitled and (II) the Closing Sale Price of the PNG Shares on the LNG Share
Delivery Date and (B) the Holder, upon written notice to the Company, may void
its Exchange Notice with respect to, and retain or have returned, as the case
may be, any portion of this Note surrendered by the Holder to the Company that
has not been

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    exchanged
pursuant to such Exchange Notice; provided that the voiding of an Exchange
Notice shall not affect the Company's obligations to make any payments which
have accrued prior to the date of such notice pursuant to this Section 4(c)(ii)
or otherwise. In addition to the foregoing, if upon or after such Exchange
Failure the Holder purchases (in an open market transaction or otherwise) PNG
Shares to deliver in satisfaction of a sale by the Holder of PNG Shares issuable
upon such exchange that the Holder anticipated receiving from the Company (a
"LNG Buy-In"), then the
Company shall, within three (3) Business Days after the Holder's request and in
the Holder's discretion, either (i) pay cash to the Holder in an amount equal to
the Holder's total purchase price (including brokerage commissions and other out
of pocket expenses, if any) for the shares of PNG Shares so purchased (the
"LNG Buy-In Price"), at
which point the Company's obligation to deliver such certificate (and to issue
such PNG Shares) shall terminate, or (ii) promptly honor its obligation to
deliver to the Holder a certificate or certificates representing such PNG Shares
and pay cash to the Holder in an amount equal to the excess (if any) of the LNG
Buy-In Price over the product of (A) such number of shares of PNG Shares, times
(B) the Closing Bid Price of PNG Shares on the Exchange Date.

     

    (iii)           Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon exchange of any
portion of this Note in accordance with the terms hereof, the Holder shall not
be required to physically surrender this Note to the Company unless (A) the full
Conversion Amount represented by this Note is being exchanged or (B) the Holder
has provided the Company with prior written notice (which notice may be included
in an Exchange Notice) requesting physical surrender and reissue of this
Note.  The Company shall maintain records showing the Principal,
Interest and Late Charges exchanged and the dates of such exchanges or shall use
such other method, reasonably satisfactory to the Holder, so as not to require
physical surrender of this Note upon exchange.

     

    (iv)           Disputes.  In
the event of a dispute as to the number of shares of PNG Shares transferable to
the Holder in connection with an exchange of this Note, the Company shall
transfer and deliver to the Holder the number of shares of PNG Shares not in
dispute and resolve such dispute in accordance with Section 26.

     

    (d)           Limitations on
Exchanges.

     

    (i)           Beneficial
Ownership.  The Company shall not effect any exchange of this
Note, and the Holder of this Note shall not have the right to exchange any
portion of this Note, pursuant to Section 4(a), Section 10 or otherwise, to the
extent that after giving effect to such exchange, the Holder (together with the
Holder's affiliates), as set forth on the applicable Exchange Notice, would
beneficially own in excess of 1.247% of the number of shares of PNG Shares
outstanding immediately after giving effect to such exchange.  For
purposes of the foregoing sentence, the number of shares of PNG Shares
beneficially owned by the Holder and its affiliates shall include the maximum
number of shares of PNG Shares deliverable upon exchange of this Note with
respect to which the determination of such sentence is being made, but shall
exclude the number of shares of PNG Shares which would be deliverable upon (A)
exchange of the remaining, nonexchanged portion of this Note beneficially owned
by the Holder or any of its affiliates and (B) exercise, conversion or exchange
of the unexercised, unconverted or nonexchanged portion of any other securities
(including, without limitation, any Other Notes or warrants) subject to a
limitation on exchange, conversion or

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    exercise
analogous to the limitation contained herein beneficially owned by the Holder or
any of its affiliates.  Except as set forth in the preceding sentence,
for purposes of this Section 4(d)(i), beneficial ownership shall be calculated
in accordance with Section 13(d) of the 1934 Act.  For purposes of
this Section 4(d)(i), in determining the number of outstanding shares of PNG
Shares, the Company and the Holder may rely on the number of outstanding shares
of PNG Shares as reflected in (x) the most recent Form 10-Q or Form 10-K of LNG,
as the case may be, or (y) a more recent public announcement by
LNG.  In any case, the number of outstanding shares of PNG Shares
shall be determined after giving effect to the exchange, conversion or exercise
of securities of the Company or LNG, including this Note, by the Holder or its
affiliates since the date as of which such number of outstanding shares of PNG
Shares was reported.  By written notice to the Company, the Holder may
increase or decrease the Maximum Percentage to any other percentage not in
excess of 4.99% specified in such notice; provided that (x) any such increase
will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company and (y) any such increase or
decrease will apply only to the Holder and not to any other holder of
Notes.

     

    (ii)           Maximum LNG
Shares.  The Company shall not be obligated to deliver any
shares of PNG Shares upon exchange of this Note or any 2008 Amendment Note,
whether pursuant to this Section 4, the Security Documents (as defined in the
Amendment and Exchange Agreements) or otherwise, if the delivery of such shares
of PNG Shares would require the delivery of more than 7,000,000 shares of PNG
Shares in the aggregate (as adjusted for any stock dividend, stock split, stock
combination or other similar transaction affecting the PNG Shares after the
Amendment Date) (the "LNG
Exchange Cap").  No Purchaser shall have delivered to it, upon
exchange of 2008 Amendment Notes, a number of shares of PNG Shares in an amount
greater than the product of the LNG Exchange Cap multiplied by a fraction, the
numerator of which is the principal amount of 2008 Amendment Notes issued to
such Purchaser pursuant to the Amendment and Exchange Agreements on the
Amendment Date and the denominator of which is the aggregate principal amount of
all 2008 Amendment Notes issued to the Purchasers pursuant to the Amendment and
Exchange Agreements on the Amendment Date (with respect to each Purchaser, the
"LNG Exchange Cap
Allocation").  In the event that any Purchaser shall sell or
otherwise transfer any of such Purchaser's 2008 Amendment Notes, the transferee
shall be allocated a pro rata portion of such Purchaser's LNG Exchange Cap
Allocation, and the restrictions of the prior sentence shall apply to such
transferee with respect to the portion of the LNG Exchange Cap Allocation
allocated to such transferee.  In the event that any such holder shall
have converted and exchanged such holder's 2008 Amendment Notes in their
entirety (such that such holder no longer has any 2008 Amendment Notes) and such
holder shall have received a number of shares of PNG Shares which, in the
aggregate, is less than such holder's LNG Exchange Cap Allocation, then the
difference between such holder's LNG Exchange Cap Allocation and the number of
shares of PNG Shares actually delivered to such holder shall be allocated to the
respective LNG Exchange Cap Allocations of the remaining holders of 2008
Amendment Notes on a pro rata basis in proportion to the aggregate principal
amount of the 2008 Amendment Notes then held by each such holder.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (5)           RIGHTS
UPON EVENT OF DEFAULT.

     

    (a)           Event of
Default.  Each of the following events shall constitute an
"Event of
Default":

     

    (i)           the
suspension from trading or failure of the Common Stock to be listed on an
Eligible Market for a period of five (5) consecutive Trading Days or for more
than an aggregate of ten (10) Trading Days in any 365-day period;

     

    (ii)           the
Company's (A) failure to cure a Conversion Failure by delivery of the required
number of shares of Common Stock within ten (10) Business Days after the
applicable Conversion Date, (B) failure to cure an Exchange Failure by delivery
of the required number of shares of PNG Shares within ten (10) Business Days
after the applicable Exchange Date or (C) notice, written or oral, to any holder
of the Notes, including by way of public announcement, at any time, of its
intention not to comply with a request for conversion or exchange of any Notes
into shares of Common Stock or PNG Shares, as applicable, that is tendered in
accordance with the provisions of the Notes, other than pursuant to Sections
3(d) or 4(d);

     

    (iii)           at
any time following the tenth (10th)
consecutive Business Day following the Authorized Share Failure Deadline that
the Holder's Authorized Share Allocation is less than the number of shares of
Common Stock that the Holder would be entitled to receive upon a conversion of
the full Conversion Amount of this Note (without regard to any limitations on
conversion set forth in Section 3(d) or otherwise);

     

    (iv)           the
Company's failure to pay to the Holder any amount of Principal, Interest, Late
Charges or other amounts when and as due under this Note (including, without
limitation, the Company's failure to pay any redemption payments or amounts
hereunder) or any other Transaction Document or any other agreement, document,
certificate or other instrument delivered in connection with the transactions
contemplated hereby and thereby to which the Holder is a party, except, in the
case of a failure to pay Interest and Late Charges when and as due, in which
case only if such failure continues for a period of at least ten (10) Business
Days;

     

    (v)           the
occurrence of any default under, redemption of or acceleration prior to maturity
of any Indebtedness of the Company or any of its Subsidiaries (as defined in
Section 3(a) of the Securities Purchase Agreement) which, individually or in the
aggregate, exceeds $500,000, other than with respect to any Other
Notes;

     

    (vi)           the
Company or LNG or any of their Subsidiaries, pursuant to or within the meaning
of Title 11, U.S. Code, or any similar Federal, foreign or state law for the
relief of debtors (collectively, "Bankruptcy Law"), (A)
commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
receiver, trustee, assignee, liquidator or similar official (a "Custodian"), (D) makes a
general assignment for the benefit of its creditors or (E) admits in writing
that it is generally unable to pay its debts as they become due;

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (vii)           a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (A) is for relief against the Company or LNG or any of their
Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or
LNG or any of their Subsidiaries or (C) orders the liquidation of the Company or
LNG or any of their Subsidiaries;

     

    (viii)                      a
final judgment or judgments for the payment of money aggregating in excess of
$1,500,000 are rendered against the Company or any of its Subsidiaries and which
judgments are not, within sixty (60) days after the entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within sixty (60)
days after the expiration of such stay; provided, however, that any judgment
which is covered by insurance or an indemnity from a credit worthy party shall
not be included in calculating the $1,500,000 amount set forth above
so long as the Company provides the Holder a written statement from such insurer
or indemnity provider (which written statement shall be reasonably satisfactory
to the Holder) to the effect that such judgment is covered by insurance or an
indemnity and the Company will receive the proceeds of such insurance or
indemnity within thirty (30) days of the issuance of such judgment;

     

    (ix)           the
Company  breaches any representation, warranty, covenant or other term or
condition of any Transaction Document, which breach has or is likely to have a
cost or adverse impact on the Company or the Holders (including by reduction in
the value of the shares of Common Stock or PNG Shares deliverable in connection
with the Transaction Documents) in excess of $250,000, except, in the case of a
breach of a covenant or other term or condition of any Transaction Document
which is curable, only if such breach continues for a period of at least ten
(10) consecutive Business Days;

     

    (x)           any
breach or failure in any respect to comply with either of Sections 9 or 15 of
this Note or Sections 1(h) and 1(i) of the Amendment and Exchange
Agreement;

     

    (xi)           the
Company or any Subsidiary shall fail to perform or comply with any covenant or
agreement contained in any Security Document (as defined in the Amendment and
Exchange Agreements) to which it is a party;

     

    (xii)           any
material provision of any Security Document (as determined by the Collateral
Agent (as defined in the Amendment and Exchange Agreements)) shall at any time
for any reason (other than pursuant to the express terms thereof) cease to be
valid and binding on or enforceable against the Company or any Subsidiary
intended to be a party thereto, or the validity or enforceability thereof shall
be contested by any party thereto, or a proceeding shall be commenced by the
Company or any Subsidiary or any governmental authority having jurisdiction over
any of them, seeking to establish the invalidity or unenforceability thereof, or
the Company or any Subsidiary shall deny in writing that it has any liability or
obligation purported to be created under any Security Document;

     

    (xiii)                      any
Security Document, after delivery thereof pursuant hereto, shall for any reason
fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, (I) first priority Lien in favor of
the Collateral Agent for

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    the
Collateral (as defined in the Security Documents) described on Schedule
5(a)(xiii)(I) attached hereto, (II) a second priority Lien in favor of
the Collateral Agent for the Collateral described on Schedule
5(a)(xiii)(II) attached hereto, and (III) a third priority Lien in favor
of the Collateral Agent for the Collateral described on Schedule
5(a)(xiii)(III) attached hereto, in each case for the benefit of the
holders of the Notes;

     

    (xiv)                      any
bank at which any deposit account, blocked account, or lockbox account of the
Company or any Subsidiary is maintained shall fail to comply with any material
term of any deposit account, blocked account, lockbox account or similar
agreement to which such bank is a party or any securities intermediary,
commodity intermediary or other financial institution at any time in custody,
control or possession of any investment property of the Company or any
Subsidiary shall fail to comply with any of the terms of any investment property
control agreement to which such Person is a party (it being understood that only
accounts pursuant to which the Collateral Agent has requested account control
agreements should be subject to this clause (xiv));

     

    (xv)           any
material damage to, or loss, theft or destruction of, any Collateral, whether or
not insured, or any strike, lockout, labor dispute, embargo, condemnation, act
of God or public enemy, or other casualty which causes, for more than fifteen
(15) consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of the Company or any Subsidiary, if any
such event or circumstance could reasonably be expected to have a Material
Adverse Effect (as defined in the Securities Purchase Agreement);

     

    (xvi)                      upon
failure to deliver to the Collateral Agent no later than five (5) Business Days
after the Amendment Date, the shares of Common Stock required to be delivered to
the Collateral Agent pursuant to the Senior Pledge Agreement (as defined in the
Amendment and Exchange Agreements) along with duly executed blank stock
powers;

     

    (xvii)                      any
Event of Default (as defined in the Other Notes) occurs with respect to any
Other Notes.

     

    (b)           Redemption
Right.  Upon the occurrence of an Event of Default with respect
to this Note or any Other Note, the Company shall within one (1) Business Day
deliver written notice thereof via facsimile and overnight courier (an "Event of Default Notice") to
the Holder.  At any time after the earlier of the Holder's receipt of
an Event of Default Notice and the Holder becoming aware of an Event of Default,
the Holder may require the Company to redeem all or any portion of this Note by
delivering written notice thereof (the "Event of Default Redemption
Notice") to the Company, which Event of Default Redemption Notice shall
indicate the portion of this Note the Holder is electing to
redeem.  Each portion of this Note subject to redemption by the
Company pursuant to this Section 5(b) shall be redeemed by the Company at a
price equal to the greater of (i) the product of (A) the sum of the Conversion
Amount to be redeemed together with accrued and unpaid Interest with respect to
such Conversion Amount and accrued and unpaid Late Charges with respect to such
Conversion Amount and Interest and (B) the Redemption Premium and (ii) the
product of (A) the Conversion Rate with respect to such sum of the Conversion
Amount together with accrued and unpaid Interest with respect to such Conversion
Amount and accrued and unpaid Late Charges with respect to such Conversion
Amount and Interest in effect at such time as the Holder delivers

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    an Event
of Default Redemption Notice and (B) the product of (1) the Equity Value
Redemption Premium and (2) the greater of (x) the Closing Sale Price of the
Common Stock on the date immediately preceding such Event of Default, (y) the
Closing Sale Price of the Common Stock on the date immediately after such Event
of Default and (z) the Closing Sale Price of the Common Stock on the date the
Holder delivers the Event of Default Redemption Notice (the "Event of Default Redemption
Price").  Redemptions required by this Section 5(b) shall be
made in accordance with the provisions of Section 11.  To the extent
redemptions required by this Section 5(b) are deemed or determined by a court of
competent jurisdiction to be prepayments of the Note by the Company, such
redemptions shall be deemed to be voluntary prepayments.  The parties
hereto agree that in the event of the Company's redemption of any portion of the
Note under this Section 5(b), the Holder's damages would be uncertain and
difficult to estimate because of the parties' inability to predict future
interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder.  Accordingly, any Redemption
Premium due under this Section 5(b) is intended by the parties to be, and shall
be deemed, a reasonable estimate of the Holder's actual loss of its investment
opportunity and not as a penalty.

     

    (6)           RIGHTS UPON FUNDAMENTAL
TRANSACTION AND CHANGE OF CONTROL.

     

    (a)           Assumption.  The
Company shall not enter into or be party to a Fundamental Transaction unless
(i)  the Successor Entity assumes in writing all of the obligations of the
Company under this Note and the other Transaction Documents in accordance with
the provisions of this Section 6(a) pursuant to written agreements in form and
substance reasonably satisfactory to the Required Holders and approved by the
Required Holders prior to such Fundamental Transaction, including agreements to
deliver to each holder of Notes in exchange for such Notes a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to the Notes, including, without limitation, having a principal
amount and interest rate equal to the principal amounts and the interest rates
of the Notes then outstanding held by such holder, having similar conversion and
exchange rights and having similar ranking to the Notes, and reasonably
satisfactory to the Required Holders and (ii)  the Successor Entity
(including its Parent Entity) is a publicly traded corporation whose common
stock is quoted on or listed for trading on an Eligible Market (a "Public Successor
Entity").  Upon the occurrence of any Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of this Note
referring to the "Company" shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Note with the same effect as if such
Successor Entity had been named as the Company herein.  Upon
consummation of the Fundamental Transaction, the Successor Entity shall deliver
to the Holder confirmation that there shall be issued upon conversion of this
Note at any time after the consummation of the Fundamental Transaction, in lieu
of the shares of the Company's Common Stock (or other securities, cash, assets
or other property) issuable upon the conversion of the Notes prior to such
Fundamental Transaction, such shares of the publicly traded common stock (or
their equivalent) of the Successor Entity (including its Parent Entity), as
adjusted in accordance with the provisions of this Note.  The
provisions of this Section 6 shall apply similarly and equally to successive
Fundamental Transactions and shall be applied without regard to any limitations
on the conversion of this Note.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (b)           Redemption
Right.  No sooner than twenty (20) Trading Days nor later than
ten (10) Trading Days prior to the consummation of a Change of Control, but not
prior to the public announcement of such Change of Control, the Company shall
deliver written notice thereof via facsimile and overnight courier to the Holder
(a "Change of Control
Notice").  At
any time during the period beginning after the Holder's receipt of a Change of
Control Notice and ending on the later of (A) one (1) Business Day prior to
consummation of such Change of Control or (B) twenty (20) Trading Days after the
date of receipt of such Change of Control Notice, the Holder may require the
Company to redeem all or any portion of this Note by delivering written notice
thereof ("Change of Control
Redemption Notice") to the Company, which Change of Control Redemption
Notice shall indicate the Conversion Amount the Holder is electing to
redeem.  The portion of this Note subject to redemption pursuant to
this Section 6 shall be redeemed by the Company in cash at a price equal to the
greater of (i) the sum of (x) the product of the Change of Control Redemption
Premium and the Conversion Amount being redeemed and (y) the amount of any
accrued but unpaid Interest on such Conversion Amount being redeemed and accrued
and unpaid Late Charges, if any, with respect to such Conversion Amount and
Interest through the date of such redemption payment and (ii) the product of (x)
the Equity Value Redemption Premium and (y) the sum of (1) the product of (A)
the Conversion Amount being redeemed multiplied by (B) the quotient determined
by dividing (I) the aggregate cash consideration and the aggregate cash value of
any non-cash consideration per Common Share to be paid to the holders of the
Common Shares upon consummation of the Change of Control (any such non-cash
consideration to be valued at the higher of the Closing Sale Price of such
securities as of the Trading Day immediately prior to the consummation of such
Change of Control, the Closing Sale Price on the Trading Day immediately
following the public announcement of such proposed Change of Control and the
Closing Sale Price on the Trading Day immediately prior to the public
announcement of such proposed Change of Control) by (II) the Conversion Price
plus (2) the amount of any accrued but unpaid Interest on such Conversion Amount
being redeemed and accrued and unpaid Late Charges, if any, with respect to such
Conversion Amount and Interest through the date of such redemption payment, (the
"Change of Control Redemption
Price").  Redemptions required by this Section 6 shall be made
in accordance with the provisions of Section 11 and shall have priority to
payments to stockholders in connection with a Change of Control.  To
the extent redemptions required by this Section 6(b) are deemed or determined by
a court of competent jurisdiction to be prepayments of the Note by the Company,
such redemptions shall be deemed to be voluntary
prepayments.  Notwithstanding anything to the contrary in this Section
6, but subject to Section 3(d), until the Change of Control Redemption Price
(together with any interest thereon) is paid in full, the Conversion Amount
submitted for redemption under this Section 6(b) (together with any interest
thereon) may be converted, in whole or in part, by the Holder into Common Stock
pursuant to Section 3.  The parties hereto agree that in the event of
the Company's redemption of any portion of the Note under this Section 6(b), the
Holder's damages would be uncertain and difficult to estimate because of the
parties' inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the
Holder.  Accordingly, any Change of Control Redemption Premium due
under this Section 6(b) is intended by the parties to be, and shall be deemed, a
reasonable estimate of the Holder's actual loss of its investment opportunity
and not as a penalty.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (7)           RIGHTS
UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

     

    (a)           Purchase
Rights.  If at any time the Company or LNG grants, issues or
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock or PNG Shares, as applicable (the "Purchase Rights"), then the
Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if
the Holder had held the number of shares of Common Stock or PNG Shares, as
applicable, acquirable upon complete conversion or exchange of this Note
(without taking into account any limitations or restrictions on the
convertibility or exchangeability of this Note) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.

     

    (b)           Other Corporate
Events.  In addition to and not in substitution for any other
rights hereunder, prior to the consummation of any Fundamental Transaction
pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a "Corporate
Event"), the Company shall make appropriate provision to insure that the
Holder will thereafter have the right to receive upon a conversion of this Note,
at the Holder's option, (i) in addition to the shares of Common Stock receivable
upon such conversion, such securities or other assets to which the Holder would
have been entitled with respect to such shares of Common Stock had such shares
of Common Stock been held by the Holder upon the consummation of such Corporate
Event (without taking into account any limitations or restrictions on the
convertibility of this Note) or (ii) in lieu of the shares of Common Stock
otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the
consummation of such Corporate Event in such amounts as the Holder would have
been entitled to receive had this Note initially been issued with conversion
rights for the form of such consideration (as opposed to shares of Common Stock)
at a conversion rate for such consideration commensurate with the Conversion
Rate.  The provisions of this Section 7 shall apply similarly and
equally to successive Corporate Events and shall be applied without regard to
any limitations on the conversion or redemption of this Note.

     

    (8)           RIGHTS UPON ISSUANCE OF
OTHER SECURITIES.

     

    (a)           Adjustment of Conversion
Price upon Issuance of Common Stock.  If and whenever on or
after the Amendment Date, the Company issues or sells, or in accordance with
this Section 8(a) is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or
for the account of the Company, but excluding shares of Common Stock deemed to
have been issued or sold by the Company in connection with any Excluded
Security) for a consideration per share (the "New Issuance Price") less than
a price equal to the Conversion Price in effect immediately prior to such issue
or sale (such price the "Applicable Price") (the
foregoing a "Dilutive
Issuance"), then immediately after such Dilutive Issuance the Conversion
Price then in effect shall be reduced to an amount equal to the New Issuance
Price.  For purposes of determining the adjusted Conversion Price
under this Section 8(a), the following shall be applicable:

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (i)           Issuance of
Options.  If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion or exchange or
exercise of any Convertible Securities issuable upon exercise of such Option is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the granting or sale of such Option for such price per share.  For
purposes of this Section 8(a)(i), the "lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Option or upon
conversion or exchange or exercise of any Convertible Securities issuable upon
exercise of such Option" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon granting or sale of the Option, upon exercise of
the Option and upon conversion or exchange or exercise of any Convertible
Security issuable upon exercise of such Option.  No further adjustment
of the Conversion Price shall be made upon the actual issuance of such share of
Common Stock or of such Convertible Securities upon the exercise of such Options
or upon the actual issuance of such Common Stock upon conversion or exchange or
exercise of such Convertible Securities.

     

    (ii)           Issuance of Convertible
Securities.  If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon such conversion or exchange or exercise thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the issuance or sale of such Convertible Securities for such price per
share.  For the purposes of this Section 8(a)(ii), the "lowest price
per share for which one share of Common Stock is issuable upon such conversion
or exchange or exercise" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon the issuance or sale of the Convertible Security
and upon the conversion or exchange or exercise of such Convertible
Security.  No further adjustment of the Conversion Price shall be made
upon the actual issuance of such share of Common Stock upon conversion or
exchange or exercise of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of the Conversion Price had been or are to be made pursuant to
other provisions of this Section 8(a), no further adjustment of the Conversion
Price shall be made by reason of such issue or sale.

     

    (iii)           Change in Option Price or
Rate of Conversion.  If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion, exchange or exercise of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable or
exercisable for Common Stock changes at any time, the Conversion Price in effect
at the time of such change shall be adjusted to the Conversion Price which would
have been in effect at such time had such Options or Convertible Securities
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.  For purposes of this Section 8(a)(iii), if the terms of any
Option or Convertible Security that was outstanding as of the Issuance Date are
changed in the manner described in the immediately preceding sentence, then such
Option or Convertible Security and the Common Stock deemed issuable upon
exercise,

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    conversion
or exchange thereof shall be deemed to have been issued as of the date of such
change.  No adjustment shall be made if such adjustment would result
in an increase of the Conversion Price then in effect.

     

    (iv)           Calculation of Consideration
Received.  In case any Option is issued in connection with the
issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for the difference of (x) the aggregate fair market value of such Options and
other securities issued or sold in such integrated transaction, less (y) the
fair market value of the securities other than such Option, issued or sold in
such transaction and the other securities issued or sold in such integrated
transaction will be deemed to have been issued or sold for the balance of the
consideration received by the Company.  If any Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor will be deemed to be the
gross amount raised by the Company; provided, however, that such gross amount is
not greater than 110% of the net amount received by the Company
therefor.  If any Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company will be the fair value of
such consideration, except where such consideration consists of securities, in
which case the amount of consideration received by the Company will be the
Closing Sale Price of such securities on the date of receipt.  If any
Common Stock, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be.  The fair value of any consideration
other than cash or securities will be determined jointly by the Company and the
Required Holders.  If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring valuation (the
"Valuation Event"), the
fair value of such consideration will be determined within five (5) Business
Days after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Required Holders.  The determination
of such appraiser shall be deemed binding upon all parties absent manifest error
and the fees and expenses of such appraiser shall be borne by the
Company.

     

    (v)           Record
Date.  If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a dividend or other
distribution payable in Common Stock, Options or in Convertible Securities or
(B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the issue or
sale of the Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be.

     

    (b)           Adjustment of Conversion
Price upon Subdivision or Combination of Common Stock.  If the
Company at any time on or after the Amendment Date subdivides (by

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision will be
proportionately reduced.  If the Company at any time on or after the
Amendment Date combines (by combination, reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination
will be proportionately increased.

     

    (c)           Other
Events.  If any event occurs of the type contemplated by the
provisions of Section 8(a) or (b) but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the Holder under this Note;
provided that no such adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 8.

     

    (d)           Voluntary Adjustment By
Company. The Company may at any time during the term of this Note reduce
the then current Conversion Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company.

     

    (e)           [Reserved]

     

    (f)           Adjustment of Exchange Price
upon Issuance of PNG Shares.  If and whenever on or after the
date of the consummation of the Share Exchange, LNG issues or sells, or in
accordance with this Section 8(f) is deemed to have issued or sold, any shares
of PNG Shares (including the issuance or sale of shares of PNG Shares owned or
held by or for the account of LNG, but excluding shares of PNG Shares deemed to
have been issued or sold by LNG in connection with any LNG Excluded Security)
for a consideration per share (the "LNG New Issuance Price") less
than a price equal to the Exchange Price in effect immediately prior to such
issue or sale (such price the "LNG Applicable Price") (the
foregoing a "LNG Dilutive
Issuance"), then immediately after such LNG Dilutive Issuance the
Exchange Price then in effect shall be reduced to an amount equal to LNG New
Issuance Price.  For purposes of determining the adjusted Exchange
Price under this Section 8(f), the following shall be applicable:

     

    (i)           Issuance of LNG
Options.  If LNG in any manner grants or sells any LNG Options
and the lowest price per share for which one share of PNG Shares is issuable
upon the exercise of any such LNG Option or upon conversion or exchange or
exercise of any LNG Convertible Securities issuable upon exercise of such LNG
Option is less than LNG Applicable Price, then such share of PNG Shares shall be
deemed to be outstanding and to have been issued and sold by LNG at the time of
the granting or sale of such LNG Option for such price per share.  For
purposes of this Section 8(f)(i), the "lowest price per share for which one
share of PNG Shares is issuable upon the exercise of any such LNG Option or upon
conversion or exchange or exercise of any LNG Convertible Securities issuable
upon exercise of such LNG Option" shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by LNG with respect to
any one share of PNG Shares upon granting or sale of LNG Option,

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    upon
exercise of LNG Option and upon conversion or exchange or exercise of any LNG
Convertible Security issuable upon exercise of such LNG Option.  No
further adjustment of the Exchange Price shall be made upon the actual issuance
of such share of PNG Shares or of such LNG Convertible Securities upon the
exercise of such LNG Options or upon the actual issuance of such PNG Shares upon
conversion or exchange or exercise of such LNG Convertible
Securities.

     

    (ii)           Issuance of LNG Convertible
Securities.  If LNG in any manner issues or sells any LNG
Convertible Securities and the lowest price per share for which one share of PNG
Shares is issuable upon such conversion or exchange or exercise thereof is less
than LNG Applicable Price, then such share of PNG Shares shall be deemed to be
outstanding and to have been issued and sold by LNG at the time of the issuance
or sale of such LNG Convertible Securities for such price per
share.  For the purposes of this Section 8(f)(ii), the "lowest price
per share for which one share of PNG Shares is issuable upon such conversion or
exchange or exercise" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by LNG with respect to any one
share of PNG Shares upon the issuance or sale of LNG Convertible Security and
upon the conversion or exchange or exercise of such LNG Convertible
Security.  No further adjustment of the Exchange Price shall be made
upon the actual issuance of such share of PNG Shares upon conversion or exchange
or exercise of such LNG Convertible Securities, and if any such issue or sale of
such LNG Convertible Securities is made upon exercise of any LNG Options for
which adjustment of the Exchange Price had been or are to be made pursuant to
other provisions of this Section 8(f), no further adjustment of the Exchange
Price shall be made by reason of such issue or sale.

     

    (iii)           Change in LNG Option Price
or Rate of Conversion.  If the purchase price provided for in
any LNG Options, the additional consideration, if any, payable upon the issue,
conversion, exchange or exercise of any LNG Convertible Securities, or the rate
at which any LNG Convertible Securities are convertible into or exchangeable or
exercisable for PNG Shares changes at any time, the Exchange Price in effect at
the time of such change shall be adjusted to the Exchange Price which would have
been in effect at such time had such LNG Options or LNG Convertible Securities
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.  For purposes of this Section 8(f)(iii), if the terms of any LNG
Option or LNG Convertible Security that was outstanding as of the Amendment Date
are changed in the manner described in the immediately preceding sentence, then
such LNG Option or LNG Convertible Security and PNG Shares deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such change.  No adjustment shall be made if such
adjustment would result in an increase of the Exchange Price then in
effect.

     

    (iv)           Calculation of Consideration
Received.  In case any LNG Option is issued in connection with
the issue or sale of other securities of LNG, together comprising one integrated
transaction in which no specific consideration is allocated to such LNG Options
by the parties thereto, LNG Options will be deemed to

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    have been
issued for the difference of (x) the aggregate fair market value of such LNG
Options and other securities issued or sold in such integrated transaction, less
(y) the fair market value of the securities other than such LNG Option, issued
or sold in such transaction and the other securities issued or sold in such
integrated transaction will be deemed to have been issued or sold for the
balance of the consideration received by LNG.  If any PNG Shares, LNG
Options or LNG Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor will be deemed to
be the gross amount raised by LNG; provided, however, that such gross amount is
not greater than 110% of the net amount received by LNG therefor.  If
any PNG Shares, LNG Options or LNG Convertible Securities are issued or sold for
a consideration other than cash, the amount of the consideration other than cash
received by LNG will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by LNG will be the Closing Sale Price of such securities on the date of
receipt.  If any PNG Shares, LNG Options or LNG Convertible Securities
are issued to the owners of the non-surviving entity in connection with any
merger in which LNG is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such PNG Shares,
LNG Options or LNG Convertible Securities, as the case may be.  The
fair value of any consideration other than cash or securities will be determined
jointly by the Company and the Required Holders.  If such parties are
unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the "LNG
Valuation Event"), the fair value of such consideration will be
determined within five (5) Business Days after the tenth (10th) day
following LNG Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Required Holders.  The determination
of such appraiser shall be deemed binding upon all parties absent manifest error
and the fees and expenses of such appraiser shall be borne by the
Company.

     

    (v)           Record
Date.  If LNG takes a record of the holders of PNG Shares for
the purpose of entitling them (A) to receive a dividend or other distribution
payable in PNG Shares, LNG Options or in LNG Convertible Securities or (B) to
subscribe for or purchase PNG Shares, LNG Options or LNG Convertible Securities,
then such record date will be deemed to be the date of the issue or sale of PNG
Shares deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.

     

    (g)           Adjustment of Exchange Price
upon Subdivision or Combination of PNG Shares.  If LNG at any
time on or after the Amendment Date subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its outstanding
shares of PNG Shares into a greater number of shares, the Exchange Price in
effect immediately prior to such subdivision will be proportionately
reduced.  If LNG at any time on or after the Amendment Date combines
(by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of PNG Shares into a smaller number of shares, the Exchange
Price in effect immediately prior to such combination will be proportionately
increased.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (h)           Other
Events.  If any event occurs of the type contemplated by the
provisions of Section 8(f) or (g) but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors will make an appropriate adjustment in the Exchange
Price so as to protect the rights of the Holder under this Note; provided that
no such adjustment will increase the Exchange Price as otherwise determined
pursuant to this Section 8.

     

    (i)           Voluntary Adjustment by the
Company. The Company may at any time during the term of this Note reduce
the then current Exchange Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.

     

    (9)           COMPANY OPTIONAL
REDEMPTION.

     

    (a)           General.  At
any time prior to June 25, 2009 (the "Redemption Expiration Date")
and so long as there is no Event of Default (unless waived by the Holder), the
Company shall have the one time right to redeem all (but not part) of the
Conversion Amount then remaining under this Note (the "Optional Redemption Amount")
as designated in the Optional Redemption Notice on the Optional Redemption Date
(each as defined below) (an "Optional
Redemption").  The portion of this Note subject to redemption
pursuant to this Section 9(a) shall be redeemed by the Company in cash at a
price equal to 61.91% of the Conversion Amount being redeemed (the "Optional Redemption
Price").  The Company may exercise its right to require
redemption under this Section 9 by delivering a written notice thereof by
facsimile and overnight courier to all, but not less than all, of the holders of
Notes (the "Optional Redemption
Notice" and the date all of the holders received such notice is referred
to as the "Optional Redemption
Notice Date").  The Optional Redemption Notice shall be
irrevocable and shall state the aggregate Conversion Amount of the Notes which
the Company has elected to be subject to Optional Redemption from the Holder and
all of the other holders of the Notes pursuant to this Section 9(a) (and
analogous provisions under the Other Notes) on the Optional Redemption Date (as
defined below).  No later than three (3) Business Days following the
Optional Redemption Notice Date, the Holder shall deliver a written notice to
the Company indicating the date on which the Optional Redemption shall occur
(the "Optional Redemption
Date") which date shall not be less than five (5) Business Days and not
later than sixty (60) Business Days following the Optional Redemption Notice
Date.  Notwithstanding anything to the contrary in this Section 9,
until the Optional Redemption Price is paid, in full, the Optional Redemption
Amount may be converted or exchanged, in whole or in part, by the Holders into
shares of Common Stock pursuant to Sections 3 and 4 hereof.  All
Conversion Amounts and Exchange Amounts converted or exchanged by the Holder
after the Optional Redemption Notice Date shall reduce the Optional Redemption
Amount of this Note required to be redeemed on the Optional Redemption
Date.  Redemptions made pursuant to this Section 9 shall be made in
accordance with Section 11.

     

    (b)           Pro Rata Redemption
Requirement.  If the Company elects to cause an Optional
Redemption pursuant to Section 9(a), then it must simultaneously take the same
action in the same proportion with respect to the Other Notes.  If the
Company elects to cause an Optional Redemption pursuant to Section 9(a) (or
similar provisions under the Other Notes) with respect to less than all of the
Conversion Amounts of the Notes then outstanding,

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    then the
Company shall require redemption of a Conversion Amount from each of the holders
of the Notes equal to the product of (i) the aggregate Conversion Amount of
Notes which the Company has elected to cause to be redeemed pursuant to Section
9(a), multiplied by (ii) the Holder Pro Rata Percentage (such amount with
respect to each holder is referred to as its "Pro Rata Redemption Amount");
provided, however that in the event that any holder's Pro Rata Redemption Amount
exceeds the outstanding Principal amount of such holder's Note, then such excess
Pro Rata Redemption Amount shall be allocated amongst the remaining holders of
Notes pro rata.  In the event that the initial holder of any Notes
shall sell or otherwise transfer any of such holder's Notes, the transferee
shall be allocated a pro rata portion of such holder's Pro Rata Percentage and
Pro Rata Redemption Amount.

     

    (10)           HOLDER'S RIGHT OF OPTIONAL
CONVERSION/ REDEMPTION.

     

    (a)           General.  At
any time and from time to time after the Amendment Date, the Holder shall have
the right, in its sole discretion, to require that the Company, convert, or, at
the Company's election, redeem an amount up to the Conversion Amount (the "Conversion/Redemption Amount")
by delivering written notice thereof (a "Holder Optional Conversion/Redemption
Notice" and the date the Holder delivers such notice, the "Holder Optional Conversion/Redemption
Notice Date").  Within one (1) Business Day of the Holder
Optional Conversion/Redemption Notice Date, the Company shall deliver to the
Holder a written notice (a "Company Conversion/Redemption
Notice" and the date the Holder receives such written notice, the "Company Conversion/Redemption Notice
Date") which notice shall (i) either (A) confirm that the
Conversion/Redemption Amount shall be converted (a "Company Optional Conversion") in whole
or in part or (B)(1) state that the Company elects to redeem (an "Company Optional Redemption"), in
whole or in part, the Conversion/Redemption Amount and (2) specify the portion
which the Company elects to redeem pursuant to a Company Optional Redemption
(such amount to be redeemed, the "Company Optional Redemption Amount")
and the portion, if any, that the Company elects to convert pursuant to a
Company Optional Conversion (such amount also, an "Company Optional Conversion Amount")
and (ii) if the Conversion/Redemption Amount is to be paid, in whole or in part,
pursuant to a Company Optional Conversion, certify that there has been no Equity
Conditions Failure.  The Company shall redeem and convert any Company
Optional Redemption Amounts and Company Optional Conversion Amounts within three
(3) Trading Days of the Company Conversion/Redemption Notice Date (the "Optional Conversion/Redemption
Date") and shall make the same conversion and redemption decisions as to
all the Notes for which the Company has received a Holder Optional
Conversion/Redemption Notice.  The portion of this Note subject to
redemption pursuant to this Section 10 shall be redeemed by the Company in cash
at a price equal to the Company Optional Redemption Amount (the "Company Optional Redemption
Price").

     

    (b)           Mechanics of Holder Optional
Conversion.  If the Company delivers a Company
Conversion/Redemption Notice electing a Company Optional Conversion in
accordance with Section 12(a), then, on the Optional Conversion/Redemption Date,
the Company shall, or shall direct the Transfer Agent to, deliver to the
Holder's account with DTC, or issue the Holder a certificate for, a number of
shares of Common Stock equal to the quotient of (A) such Company Optional
Conversion Amount divided by (B) the Optional Conversion Price on the Optional
Conversion/Redemption Date.  If the Company has elected a Company
Optional Conversion, in whole or in part, and there is an Equity Conditions
Failure at the

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Optional
Conversion/Redemption Date, then at the option of the Holder designated in
writing to the Company, the Holder may require the Company to do either one or
both of the following: (A) the Company shall redeem all or any part designated
by the Holder of the unconverted Company Optional Conversion Amount (such
designated amount is referred to as the "Holder Designated Redemption
Amount") on such Optional Conversion/Redemption Date and the Company
shall pay to the Holder on such Optional Conversion/Redemption Date by wire
transfer of immediately available funds, an amount in cash equal to 125% of such
Holder Designated Redemption Amount, and/or (B) the Company Optional Conversion
shall be null and void with respect to all or any part designated by the Holder
of the unconverted Company Optional Conversion Amount and the Holder shall be
entitled to all the rights of a holder of this Note with respect to such amount
of the Company Optional Conversion Amount; provided, however, that the
Conversion Price for such unconverted Company Optional Conversion Amount shall
thereafter be adjusted to equal the lowest the Optional Conversion Price as in
effect during the period beginning on the date on which the Holder voided the
Company Optional Conversion and ending on the date on which the Holder delivers
a Conversion Notice relating thereto.  If the Company fails to redeem
the Holder Designated Redemption Amount on or before the Optional
Conversion/Redemption Date by payment of such amount on such Optional
Conversion/Redemption Date then the Holder shall have the rights set forth in
Section 13 as if the Company failed to pay the applicable Company Optional
Redemption Price and all other rights under this Note (including, without
limitation, such failure constituting an Event of Default described in Section
4(a)(v)).

     

    (c)           Mechanics of Holder Optional
Redemption.  Company Optional Redemptions made pursuant to this
Section 10 shall be made redeemed by the Company in cash at a price equal to the
applicable Optional Redemption Amount (each such amount, the "Holder Optional Redemption
Price" and, collectively with the Event of Default Redemption Price, the
Change of Control Redemption Price and the Optional Redemption Price, the "Redemption Prices" and, each a
"Redemption Price") in accordance with
Section 11.

     

    (11)           HOLDER'S
REDEMPTIONS.

     

    (a)           Mechanics.  The
Company shall deliver the applicable Event of Default Redemption Price to the
Holder within five (5) Business Days after the Company's receipt of the Holder's
Event of Default Redemption Notice.  If the Holder has submitted a
Change of Control Redemption Notice in accordance with Section 6(b), the Company
shall deliver the applicable Change of Control Redemption Price to the Holder
concurrently with the consummation of such Change of Control if such notice is
received prior to the consummation of such Change of Control and within five (5)
Business Days after the Company's receipt of such notice
otherwise.  The Company shall deliver the applicable Optional
Redemption Price to the Holder on the applicable Optional Date and the
applicable Holder Optional Redemption Price on the applicable Optional
Redemption Date.  In the event of a redemption of less than all of the
Conversion Amount of this Note, the Company shall promptly cause to be issued
and delivered to the Holder a new Note (in accordance with Section 21(d))
representing the outstanding Principal which has not been
redeemed.  In the event that the Company does not pay the applicable
Redemption Price to the Holder within the time period required, at any time
thereafter and until the Company pays such unpaid Redemption Price in full, the
Holder shall have the option, in lieu of redemption, to require the Company to
promptly return to the Holder all or any

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    portion
of this Note representing the Conversion Amount that was submitted for
redemption and for which the applicable Redemption Price (together with any Late
Charges thereon) has not been paid.  Upon the Company's receipt of
such notice, (x) the applicable Redemption Notice shall be null and void with
respect to such Conversion Amount, (y) the Company shall immediately return this
Note, or issue a new Note (in accordance with Section 21(d)) to the Holder
representing the sum of such Conversion Amount to be redeemed together with
accrued and unpaid Interest with respect to such Conversion Amount and accrued
and unpaid Late Charges with respect to such Conversion Amount and Interest and
(z) the Conversion Price of this Note or such new Notes shall be adjusted to the
lesser of (A) the Conversion Price as in effect on the date on which the
applicable Redemption Notice is voided and (B) the lowest Closing Bid Price of
the Common Stock during the period beginning on and including the date on which
the applicable Redemption Notice is delivered to the Company and ending on and
including the date on which the applicable Redemption Notice is
voided.  The Holder's delivery of a notice voiding a Redemption Notice
and exercise of its rights following such notice shall not affect the Company's
obligations to make any payments of Late Charges which have accrued prior to the
date of such notice with respect to the Conversion Amount subject to such
notice.

     

    (b)           Redemption by Other
Holders.  Upon the Company's receipt of notice from any of the
holders of the Other Notes for redemption or repayment as a result of an event
or occurrence substantially similar to the events or occurrences described in
Section 5(b), Section 6(b) or Section 10 (each, an "Other Redemption Notice"), the
Company shall immediately, but no later than one (1) Business Day of its receipt
thereof, forward to the Holder by facsimile a copy of such notice.  If
the Company receives a Redemption Notice and one or more Other Redemption
Notices, during the seven (7) Business Day period beginning on and including the
date which is three (3) Business Days prior to the Company's receipt of the
Holder's Redemption Notice and ending on and including the date which is three
(3) Business Days after the Company's receipt of the Holder's Redemption Notice
and the Company is unable to redeem all principal, interest and other amounts
designated in such Redemption Notice and such Other Redemption Notices received
during such seven (7) Business Day period, then the Company shall redeem a pro
rata amount from each holder of the Notes (including the Holder) based on the
principal amount of the Notes submitted for redemption pursuant to such
Redemption Notice and such Other Redemption Notices received by the Company
during such seven Business Day period.

     

    (12)           MANDATORY
PREPAYMENTS.

     

    (a)           General.  Upon
the occurrence of a Mandatory Prepayment Event, the Company or, in the event any
proceeds of such Mandatory Prepayment Event is received by a Subsidiary, such
Subsidiary shall redeem from all holders of Notes (based on such holder's Pro
Rata Percentage), the maximum principal amount of all Notes outstanding that may
be redeemed out of the applicable Mandatory Prepayment Amount (a "Mandatory Prepayment") at a
price in cash for all such redeemed Notes equal to the Principal amount plus
accrued and unpaid Interest and Late Charges, if any, with respect to the
aggregate amount of Notes to be redeemed.  The portion of this Note
subject to redemption at a price equal to the Principal amount pursuant to this
Section 12 shall be redeemed by the Company or such Subsidiary, as applicable,
in cash in an amount equal to the product of the holder's Pro Rata Percentage
and the Mandatory

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Prepayment
Amount (the "Mandatory
Prepayment Price").  The Company or such Subsidiary, as
applicable, shall deliver a written notice thereof within three (3) Business
Days prior to the occurrence of such Mandatory Prepayment Event by confirmed
facsimile and overnight courier to all, but not less than all, of the holders of
the Notes (the "Mandatory
Prepayment Notice" and the date such notice is delivered to all the
holders is referred to as the "Mandatory Prepayment Notice
Date").  Each Mandatory Prepayment Notice shall (A) describe
the Mandatory Prepayment Event, including, without limitation a certification by
the Company's or such Subsidiary's, as the case may be, Chief Financial Officer
demonstrating the calculation of the aggregate cash proceeds received by the
Company or such Subsidiary in connection with such event, (B) state the date on
which the Mandatory Prepayment shall occur (the "Mandatory Prepayment Date")
which date shall be not more than ten (10) Business Days after the Mandatory
Prepayment Notice Date and (C) state the Mandatory Prepayment Amount and the
Mandatory Prepayment Price to be paid to the Holder on such date.  The
Company shall publicly disclose (as part of an Annual Report on Form 10-KSB
or 10-K, as applicable, a Quarterly Report on Form 10-QSB or 10-Q, as
applicable, or on a Current Report on Form 8-K or otherwise), to the extent
required by federal securities laws, that (1) a Mandatory Prepayment Event has
occurred and that, pursuant to the terms of the Principal amount of the Notes,
the Company or such Subsidiary, as applicable, is required to pay all or a
portion of the Notes with any proceeds received therefrom and (2) the amount of
proceeds received from such Mandatory Prepayment Event.  In the event
that the Company or such Subsidiary shall subsequently determine after the
Mandatory Prepayment Date that the actual Mandatory Prepayment Amount received
exceeded the amount set forth in the applicable Mandatory Prepayment Notice, the
Company or such Subsidiary, as applicable, shall promptly make an additional
Mandatory Prepayment of the Notes in an amount equal to such excess, and the
Company or such Subsidiary shall concurrently therewith (1) deliver to each
holder of Notes a certificate of the Chief Financial Officer demonstrating the
derivation of such excess and (2) to the extent required by federal securities
laws, publicly disclose (as part of a Current Report on Form 8-K, or
otherwise) the making of such additional Mandatory Prepayment, including,
without limitation, the additional amount being prepaid.

     

    (b)           Mechanics. The
Company shall deliver the Mandatory Prepayment Price to the Holder on or before
the Mandatory Prepayment Date.

     

    (13)           SECURITY.  This
Note and the Other Notes are secured to the extent and in the manner set forth
in the Security Documents.

     

    (14)           NONCIRCUMVENTION.  The
Company hereby covenants and agrees that the Company will not, by amendment of
its Certificate of Incorporation, Bylaws or through any reorganization, transfer
of assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, and will at all
times in good faith carry out all of the provisions of this Note and take all
action as may be required to protect the rights of the Holder of this
Note.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (15)           RESERVATION OF AUTHORIZED
SHARES.

     

    (a)           Reservation.  The
Company shall initially reserve out of its authorized and unissued Common Stock
a number of shares of Common Stock for each of the Notes equal to 130% of the
Conversion Rate with respect to the Conversion Amount of each such Note as of
the Amendment Date.  So long as any of the Notes are outstanding, the
Company shall take all action necessary to reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Notes, 130% of the number of shares of Common Stock as shall
from time to time be necessary to effect the conversion of all of the Notes then
outstanding; provided that at no time shall the number of shares of Common Stock
so reserved be less than the number of shares required to be reserved by the
previous sentence (without regard to any limitations on conversions) (the "Required Reserve
Amount").  The initial number of shares of Common Stock
reserved for conversions of the Notes and each increase in the number of shares
so reserved shall be allocated pro rata among the holders of the Notes based on
the principal amount of the Notes held by each holder at the Closing (as defined
in the Securities Purchase Agreement) or increase in the number of reserved
shares, as the case may be (the "Authorized Share
Allocation").  In the event that a holder shall sell or
otherwise transfer any of such holder's Notes, each transferee shall be
allocated a pro rata portion of such holder's Authorized Share
Allocation.  Any shares of Common Stock reserved and allocated to any
Person which ceases to hold any Notes shall be allocated to the remaining
holders of Notes, pro rata based on the principal amount of the Notes then held
by such holders.

     

    (b)           Insufficient Authorized
Shares.  If at any time while any of the Notes remain
outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion of the Notes at least a number of shares of Common
Stock equal to the Required Reserve Amount (an "Authorized Share Failure"),
then the Company shall immediately take all action necessary to increase the
Company's authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for the Notes then
outstanding.  Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than ninety (90) days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in (the "Authorized Share Failure
Deadline"), the number of authorized shares of Common
Stock.  In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its best efforts to
solicit its stockholders' approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (16)           VOTING
RIGHTS.  The Holder shall have no voting rights as the holder
of this Note, except as required by law, including, but not limited to, the
General Corporation Law of the State of Delaware, and as expressly provided in
this Note.

     

    (17)           COVENANTS.

     

    (a)           Rank.                      All
payments due under this Note (a) shall rank pari passu with all Other
Notes and (b) shall be senior to all other Indebtedness of the Company and its
Subsidiaries other than Permitted Senior Indebtedness.  The Holder of
this Note, and each Person holding this Note, whether upon original issue or
upon registration of transfer, assignment or exchange hereof, agrees for the
benefit of all holders of Permitted Senior Indebtedness, whether outstanding on
the date of this Note or thereafter incurred, that the payment of all amounts,
expenses, fees, Principal, Late Charges and any and all other obligations of any
kind of the Company owed in connection with this Note shall be subordinated to
the prior payment in full in cash of all amounts owing in connection with such
Permitted Senior Indebtedness to the extent and in the manner set forth in the
Subordination Agreement; provided, however, that the Mandatory Prepayment Price
due under this Note pursuant to Section 12 shall be senior to the Permitted
Senior Indebtedness.

     

    (b)           Incurrence of
Indebtedness.  So long as this Note is outstanding, the Company
shall not, and the Company shall not permit any of its Subsidiaries to, directly
or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness,
other than (i) the Indebtedness evidenced by this Note and the Other Notes and
(ii) other Permitted Indebtedness.

     

    (c)           Existence of
Liens.  So long as this Note is outstanding, the Company shall
not, and the Company shall not permit any of its Subsidiaries to, directly or
indirectly, allow or suffer to exist any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by the Company or any of its
Subsidiaries (collectively, "Liens") other than Permitted
Liens.

     

    (d)           Restricted
Payments.  The Company shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly, redeem, defease,
repurchase, repay or make any payments in respect of, by the payment of cash or
cash equivalents (in whole or in part, whether by way of open market purchases,
tender offers, private transactions or otherwise), all or any portion of any
Permitted Indebtedness, whether by way of payment in respect of principal of (or
premium, if any) or interest on, such Indebtedness if at the time such payment
is due or is otherwise made or, after giving effect to such payment, (i) an
event constituting an Event of Default has occurred and is continuing or (ii) an
event that with the passage of time and without being cured would constitute an
Event of Default has occurred and is continuing.

     

    (e)           Restriction on Redemption
and Cash Dividends.  Until all of the Notes have been
converted, redeemed or otherwise satisfied in accordance with their terms, the
Company shall not, directly or indirectly, redeem, repurchase or declare or pay
any cash dividend or distribution on its capital stock without the prior express
written consent of the Required Holders.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (f)           Creation of New
Subsidiaries.  So long as the obligations of the Company under
this Note are outstanding, if the Company shall create or acquire any
Subsidiary, simultaneous with the creation or acquisition of such
Subsidiary, the Company
shall (i) promptly cause such Subsidiary to become a guarantor by executing a
guaranty in favor of the Holder in form and substance reasonably acceptable to
the Company, the Subsidiary and the Holder, (ii) promptly cause such Subsidiary
to become a grantor under the Security Agreement by executing a joinder to the
Security Agreement in form and substance reasonably acceptable to the Company,
the Subsidiary and the Holder, (iii) promptly cause such Subsidiary to become a
pledgor by the Company and such Subsidiary executing a pledge agreement in form
and substance reasonably acceptable to the Company, the Subsidiary and the
Holder, and (iv) promptly cause such Subsidiary to duly execute and/or deliver
such opinions of counsel and other documents, in form and substance reasonable
acceptable to the Holder, as the Holder shall reasonably request with respect
thereto.

     

    (g)           Intellectual
Property.  So long as the obligations of the Company under this
Note are outstanding, the Company shall not, and shall not permit any Subsidiary
to, directly or indirectly, (i) assign, transfer or otherwise encumber or allow
any other Person to have any rights or license to any of the Intellectual
Property Rights (as defined in the Securities Purchase Agreement) of the Company
or its Subsidiaries or (ii) take any action or inaction to impair the value of
their Intellectual Property Rights.

     

    (h)           Change in Collateral;
Collateral Records.  The Company shall (i)  give the
Collateral Agent (as defined in the Securities Purchase Agreement) not less than
thirty (30) days' prior written notice of any change in the location of any
Collateral), other than to locations set forth on Schedule 14(h) hereto and
with respect to which the Collateral Agent has filed financing statements and
otherwise fully perfected its Liens thereon, (ii) advise the Collateral
Agent promptly, in sufficient detail, of any material adverse change relating to
the type, quantity or quality of the Collateral or the Lien granted thereon and
(iii) execute and deliver, and cause each of its Subsidiaries to execute
and deliver, to the Collateral Agent for the benefit of the Holder and holders
of the Other Notes from time to time, solely for the Collateral Agent's
convenience in maintaining a record of Collateral, such written statements and
schedules as the Collateral Agent may reasonably require, designating,
identifying or describing the Collateral.

     

    (i)           Transactions with
Affiliates.  The Company shall not, nor shall it permit any of
its Subsidiaries to, enter into, renew, extend or be a party to, any transaction
or series of related transactions (including, without limitation, the purchase,
sale, lease, transfer or exchange of property or assets of any kind or the
rendering of services of any kind) with any Affiliate, except in the ordinary
course of business in a manner and to an extent consistent with past practice
and necessary or desirable for the prudent operation of its business, for fair
consideration and on terms no less favorable to it or its Subsidiaries than
would be obtainable in a comparable arm's length transaction with a Person that
is not an Affiliate thereof.

     

    (j)           Change in Nature of
Business.  The Company shall not make, or permit any of its
Subsidiaries to make, any change in the nature of its business as described in
the Company's current report on Form 8-K filed with the SEC on July 17,
2007.  The Company shall not modify its corporate structure or
purpose.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (k)           Preservation of Existence,
Etc.  The Company shall maintain and preserve, and cause each
of its Subsidiaries to maintain and preserve, its existence, rights and
privileges, and become or remain, and cause each of its Subsidiaries to become
or remain, duly qualified and in good standing in each jurisdiction in which the
character of the properties owned or leased by it or in which the transaction of
its business makes such qualification necessary.

     

    (l)           Maintenance of Properties,
Etc.  The Company shall maintain and preserve, and cause each
of its Subsidiaries to maintain and preserve, all of its properties which are
necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear and tear excepted, and comply, and cause each of
its Subsidiaries to comply, at all times with the provisions of all leases to
which it is a party as lessee or under which it occupies property, so as to
prevent any loss or forfeiture thereof or thereunder.

     

    (m)           Maintenance of
Insurance.  The Company shall maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations (including, without limitation, comprehensive general
liability, hazard, rent and business interruption insurance) with respect to its
properties (including all real properties leased or owned by it) and business,
in such amounts and covering such risks as is required by any governmental
authority having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated and in any event in amount, adequacy and scope reasonably
satisfactory to the Collateral Agent.  All policies covering the
Collateral are to be made payable to the Collateral Agent for the benefit of the
Holder and the holder of the Other Notes, as its interests may appear, in case
of loss, under a standard non-contributory "lender" or "secured party" clause
and are to contain such other provisions as the Collateral Agent may require to
fully protect the interest of the Holder and the holder of the Other Notes in
the Collateral and to any payments to be made under such
policies.  All certificates of insurance are to be delivered to the
Collateral Agent and the policies are to be premium prepaid, with the loss
payable and additional insured endorsement in favor of the Collateral Agent and
such other Persons as the Collateral Agent may designate from time to time, and
shall provide for not less than 30 days' prior written notice to the Collateral
Agent of the exercise of any right of cancellation.  If the Company or
any of its Subsidiaries fails to maintain such insurance, the Collateral Agent
may arrange for such insurance, but at the Company's expense and without any
responsibility on the Collateral Agent's part for obtaining the insurance, the
solvency of the insurance companies, the adequacy of the coverage, or the
collection of claims.  Upon the occurrence and during the continuance
of an Event of Default, the Collateral Agent shall have the sole right, in the
name of the Holder and the holders of the Other Notes, the Company and its
Subsidiaries, to file claims under any insurance policies, to receive, receipt
and give acquittance for any payments that may be payable thereunder, and to
execute any and all endorsements, receipts, releases, assignments, reassignments
or other documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.

     

    (n)           Financial
Information.  The Company agrees to send the following to each
Holder (i) unless the following are filed with the SEC through EDGAR and are
available to the public through the EDGAR system, within one (1) Business Day
after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K
or 10-KSB, any interim reports or any consolidated balance sheets, income
statements, stockholders' equity statements and/or cash flow

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    statements
for any period other than annual, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments filed pursuant to
the 1933 Act, (ii) on the same day as the release thereof, if not publicly
filed, facsimile or e-mailed copies of all press releases issued by the Company
or any of its Subsidiaries, and (iii) copies of any notices and other
information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.

     

    (o)           Reporting
Requirements.  The Company will, and will cause each of its
Subsidiaries to, furnish to the Holder (if not available through the SEC's
website on EDGAR):

     

    (i)           promptly
after submission to any Governmental Authority, all documents and information
furnished to such Governmental Authority in connection with any investigation of
any the Company or its Subsidiaries other than routine inquiries by such
Governmental Authority;

     

    (ii)           promptly
after the commencement thereof but in any event not later than five (5) days
after service of process with respect thereto on, or the obtaining of knowledge
thereof by, any of the Company or its Subsidiaries, notice of each action, suit
or proceeding before any court or other Governmental Authority or other
regulatory body or any arbitrator which, if adversely determined, could have a
Material Adverse Effect;

     

    (iii)           as
soon as possible and in any event within five (5) days after execution, receipt
or delivery thereof, copies of any material notices that the Company or its
Subsidiaries executes or receives in connection with any Material
Contract;

     

    (iv)           as
soon as possible and in any event within five (5) days after execution, receipt
or delivery thereof, copies of any material notices that the Company or its
Subsidiaries executes or receives in connection with the sale or other
Disposition of the Capital Stock of, or all or substantially all of the assets
of, the Company or its Subsidiaries;

     

    (v)           promptly
after the sending or filing thereof, copies of all statements, reports and other
information the Company or its Subsidiaries sends to any holders of its
Indebtedness or its securities or files with the SEC or any national (domestic
or foreign) securities exchange;

     

    (vi)           promptly
upon receipt thereof, copies of all financial reports (including, without
limitation, management letters), if any, submitted to the Company or its
Subsidiaries by its auditors in connection with any annual or interim audit of
the books thereof; and

     

    (vii)           promptly
upon request, such other information concerning the condition or operations,
financial or otherwise, of the Company or its Subsidiaries as the Holder may
from time to time may reasonably request.

     

    (p)           Inspection
Rights.  The Company will permit, and cause each of its
Subsidiaries to permit, the agents and representatives of the Holder at any time
and from time to

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    time
during normal business hours, at the expense of the Company, to examine and make
copies of and abstracts from its records and books of account, to visit and
inspect its properties, to verify materials, leases, notes, accounts receivable,
deposit accounts and its other assets, to conduct audits, physical counts,
valuations, appraisals, Phase I Environmental Site Assessments (and, if
requested by the Collateral Agent after an Event of Default based upon the
results of any such Phase I Environmental Site Assessment, a Phase II
Environmental Site Assessment) or examinations and to discuss its affairs,
finances and accounts with any of its directors, officers, managerial employees,
independent accountants or any of its other representatives.  In
furtherance of the foregoing, the Company hereby authorizes its independent
accountants, and the independent accountants of each of its Subsidiaries, to
discuss the affairs, finances and accounts of such Person (independently or
together with representatives of such Person) with the agents and
representatives of the Holder in accordance with this Section
17(s).

     

    (q)           Restrictions on Subsidiary
Distributions.  Except as provided herein, neither the Company
nor any of the Guarantors (as defined in the Security Documents) shall, nor
shall they permit any of their Subsidiaries to, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any Subsidiary of the Company or any of the
Guarantors to (A) pay dividends or make any other distributions on any of such
Subsidiary's Capital Stock owned by the Company or any of the Guarantors, (B)
repay or prepay any Indebtedness owed by such Subsidiary to the Company, any of
the Guarantors or any other Subsidiary of the Company, (C) make loans or
advances to the Company, any of the Guarantors or any other Subsidiary of the
Company, or (D) transfer any of its property or assets to the Company, any of
the Guarantors or any other Subsidiary of the Company other than restrictions by
reason of customary provisions restricting assignments, subletting or other
transfers contained in leases, licenses, joint venture agreements and similar
agreements entered into in the ordinary course of business

     

    (r)           Additional Negative
Covenants.  So long as any amounts due under this note remains
unpaid, the Company shall not, unless the Required Holders shall otherwise
consent in writing:

     

    (i)           Fundamental Changes;
Dispositions.  Directly or indirectly, in one or more related
transactions, be a party to any Fundamental Transaction.

     

    (ii)           Restricted
Payments.  (i)  Declare or pay any dividend or other
distribution, direct or indirect, on account of any Capital Stock of the Company
or any of its Subsidiaries (except to the Company), now or hereafter
outstanding, (ii) make any repurchase, redemption, retirement, defeasance,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any Capital Stock of the Company or any of its Subsidiaries, now
or hereafter outstanding, (iii) make any payment to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights for the purchase
or acquisition of shares of any class of Capital Stock of any the Company or any
of its Subsidiaries, now or hereafter outstanding, (iv) return any Capital Stock
to any shareholders or other equity holders of the Company or any of its
Subsidiaries, or make any other distribution of property, assets, shares of
Capital Stock, warrants, rights, options, obligations or securities thereto as
such or (v) pay any management fees or any other fees or expenses (including the
reimbursement thereof by the Company or any of its Subsidiaries) pursuant to any
management, consulting or other services

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    agreement
to any of the shareholders or other equityholders of the Company or any of its
Subsidiaries, or other Affiliates.

     

    (18)           PARTICIPATION.  The
Holder, as the holder of this Note, shall be entitled to receive such dividends
paid and distributions made to the holders of Common Stock to the same extent as
if the Holder had converted this Note into Common Stock (without regard to any
limitations on conversion herein or elsewhere) and had held such shares of
Common Stock on the record date for such dividends and
distributions.  Payments under the preceding sentence shall be made
concurrently with the dividend or distribution to the holders of Common
Stock.

     

    (19)           VOTE TO ISSUE, OR CHANGE THE
TERMS OF, NOTES; WAIVERS.  The affirmative vote at a meeting
duly called for such purpose or the written consent without a meeting of the
Required Holders shall be required for any change or amendment to this Note or
the Other Notes; provided, however, that (i) no change or amendment may be made
to this Note that would adversely affect the rights of such Holder without such
Holder's consent and (ii) the consent of each Holder is required to waive any
existing Event of Default relating to a default in the payment of the principal
of, premium, if any, interest on, or the conversion or exchange of, the Note
and/or the Other Notes; provided further however, that nothing in this sentence
shall preclude any holder of Notes from amending or waiving any term or
provision of such holder's Note.  To the extent that any Other Note is
amended or changed by the Company and the holder of such Other Note such that it
is or will be more favorable to the holder of such Other Note than this Note is
to the Holder, then this Note shall be, without any further action by the Holder
or the Company, deemed amended and modified in an economically and legally
equivalent manner such that the Holder shall receive the benefit of the more
favorable terms contained in such amended Other Note.  The Company
agrees, at its expense, to take such other actions (such as entering into
amendments to the Note) as the Holder may reasonably request to further
effectuate the foregoing.

     

    (20)           TRANSFER.  This
Note and any shares of Common Stock issued upon conversion of this Note may be
offered, sold, assigned or transferred by the Holder without the consent of the
Company, subject only to the provisions of Section 2(f) of the Securities
Purchase Agreement.

     

    (21)           REISSUANCE OF THIS
NOTE.

     

    (a)           Transfer.  If
this Note is to be transferred, the Holder shall surrender this Note to the
Company, whereupon the Company will, subject to the satisfaction of the transfer
provisions of the Securities Purchase Agreement, forthwith issue and deliver
upon the order of the Holder a new Note (in accordance with Section 21(d)),
registered in the name of the registered transferee or assignee, representing
the outstanding Principal being transferred by the Holder and, if less then the
entire outstanding Principal is being transferred, a new Note (in accordance
with Section 21(d)) to the Holder representing the outstanding Principal not
being transferred.  The Holder and any assignee, by acceptance of this
Note, acknowledge and agree that, by reason of the provisions of Section
3(c)(iii) following conversion or redemption of any portion of this Note, the
outstanding Principal represented by this Note may be less than the Principal
stated on the face of this Note.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (b)           Lost, Stolen or Mutilated
Note.  Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Note, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in accordance with
Section 21(d)) representing the outstanding Principal.

     

    (c)           Note Exchangeable for
Different Denominations.  This Note is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Note or Notes (in accordance with Section 21(d) and in principal amounts of at
least $100,000) representing in the aggregate the outstanding Principal of this
Note, and each such new Note will represent such portion of such outstanding
Principal as is designated by the Holder at the time of such
surrender.

     

    (d)           Issuance of New
Notes.  Whenever the Company is required to issue a new Note
pursuant to the terms of this Note, such new Note (i) shall be of like tenor
with this Note, (ii) shall represent, as indicated on the face of such new Note,
the Principal remaining outstanding (or in the case of a new Note being issued
pursuant to Section 21(a) or Section 21(c), the Principal designated by the
Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note,
which is the same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued and unpaid
Interest and Late Charges on the Principal and Interest of this Note, from the
Issuance Date.

     

    (22)           REMEDIES, CHARACTERIZATIONS,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The
remedies provided in this Note shall be cumulative and in addition to all other
remedies available under this Note and any of the other Transaction Documents at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the Holder's right to pursue
actual and consequential damages for any failure by the Company to comply with
the terms of this Note.  Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof).  The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate.  The Company
therefore agrees that, in the event of any such breach or threatened breach, the
Holder shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.

     

    (23)           PAYMENT OF COLLECTION,
ENFORCEMENT AND OTHER COSTS.  If (a) after an Event of Default
this Note is placed in the hands of an attorney for collection or enforcement or
is collected or enforced through any legal proceeding or the Holder otherwise
takes action to collect amounts due under this Note or to enforce the provisions
of this Note or (b) there occurs any bankruptcy, reorganization, receivership of
the Company or other

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    proceedings
affecting Company creditors' rights and involving a claim under this Note, then
the Company shall pay the costs incurred by the Holder for such collection,
enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys' fees
and disbursements.

     

    (24)           CONSTRUCTION;
HEADINGS.  This Note shall be deemed to be jointly drafted by
the Company and all the Purchasers and shall not be construed against any person
as the drafter hereof.  The headings of this Note are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Note.

     

    (25)           FAILURE OR INDULGENCE NOT
WAIVER.  No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.

     

    (26)           DISPUTE
RESOLUTION.  In the case of a dispute as to the determination
of the Closing Bid Price, the Closing Sale Price or the Weighted Average Price
or the arithmetic calculation of the Conversion Rate or any Redemption Price,
the Company shall submit the disputed determinations or arithmetic calculations
via facsimile within two (2) Business Days of receipt, or deemed receipt, of the
Conversion Notice or Redemption Notice or other event giving rise to such
dispute, as the case may be, to the Holder.  If the Holder and the
Company are unable to agree upon such determination or calculation within two
(2) Business Days of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall, within two (2) Business Days
submit via facsimile (a) the disputed determination of the Closing Bid Price,
the Closing Sale Price or the Weighted Average Price to an independent,
reputable investment bank selected by the Company and approved by the Holder or
(b) the disputed arithmetic calculation of the Conversion Rate or any Redemption
Price to the Company's independent, outside accountant.  The Company,
at the Company's expense, shall cause the investment bank or the accountant, as
the case may be, to perform the determinations or calculations and notify the
Company and the Holder of the results no later than five (5) Business Days from
the time it receives the disputed determinations or
calculations.  Such investment bank's or accountant's determination or
calculation, as the case may be, shall be binding upon all parties absent
demonstrable error.

     

    (27)           NOTICES;
PAYMENTS.

     

    (a)           Notices.  Whenever
notice is required to be given under this Note, unless otherwise provided
herein, such notice shall be given in accordance with Section 10(f) of the
Securities Purchase Agreement.  The Company shall provide the Holder
with prompt written notice of all actions taken pursuant to this Note, including
in reasonable detail a description of such action and the reason
therefore.  Without limiting the generality of the foregoing, the
Company will give written notice to the Holder (i) immediately upon any
adjustment of the Conversion Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least twenty (20)
days prior to the date on which the Company closes its books or takes a record
(A) with respect to any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Fundamental Transaction,
dissolution or

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the
Holder.

     

    (b)           Payments.  Whenever
any payment of cash is to be made by the Company to any Person pursuant to this
Note, such payment shall be made in lawful money of the United States of America
by a check drawn on the account of the Company and sent via overnight courier
service to such Person at such address as previously provided to the Company in
writing (which address, in the case of each of the Purchasers, shall initially
be as set forth on the Schedule of Buyers attached to the Securities Purchase
Agreement); provided that the Holder may elect to receive a payment of cash via
wire transfer of immediately available funds by providing the Company with prior
written notice setting out such request and the Holder's wire transfer
instructions.  Whenever any amount expressed to be due by the terms of
this Note is due on any day which is not a Business Day, the same shall instead
be due on the next succeeding day which is a Business Day and, in the case of
any Interest Date which is not the date on which this Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes
of determining the amount of Interest due on such date.  Any amount of
Principal or other amounts due under the Transaction Documents, other than
Interest, which is not paid when due shall result in a late charge being
incurred and payable by the Company in an amount equal to interest on such
amount at the rate of eighteen percent (18%) per annum from the date such amount
was due until the same is paid in full ("Late Charge").

     

    (28)           CANCELLATION.  After
all Principal, accrued Interest and other amounts at any time owed on this Note
have been paid in full, this Note shall automatically be deemed canceled, shall
be surrendered to the Company for cancellation and shall not be
reissued.

     

    (29)           WAIVER OF
NOTICE.  To the extent permitted by law, the Company hereby
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note
and the Securities Purchase Agreement.

     

    (30)           GOVERNING LAW; JURISDICTION; SEVERABILITY;
JURY TRIAL.  This Note shall be construed and enforced in
accor­dance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York.  The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law.  In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    unenforceable
under any law shall not affect the validity or enforceability of any other
provision of this Note.  Nothing contained herein shall be deemed or
operate to preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company's
obligations to the Holder, to realize on any collateral or any other security
for such obligations, or to enforce a judgment or other court ruling in favor of
the Holder.  THE
COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED
HEREBY.

     

    (31)           CERTAIN
DEFINITIONS.  For purposes of this Note, the following terms
shall have the following meanings:

     

    (a)           "2008 Amendment Notes" has the
meaning ascribed to such term in the Amendment and Exchange
Agreements.

     

    (b)           "Approved Stock Plan" means any
employee benefit plan which has been approved by the Board of Directors of the
Company, pursuant to which the Company's securities may be issued to any
employee, consultant, officer or director for services provided to the
Company.

     

    (c)           "Automatic Adjustment Date"
means the first day of each calendar month following the three (3) month
anniversary of the Amendment Date.

     

    (d)           "Automatic Adjustment Reset
Price" means with respect to the applicable Automatic Adjustment Date,
90% of the arithmetic average of the Weighted Average Prices of the Common Stock
during the ten (10) Trading Days ending on the Trading Day immediately prior to
the applicable Automatic Adjustment Date (the "Automatic Adjustment Period"),
each as appropriately adjusted for any stock split, stock dividend, stock
combination or other similar transaction that proportionately decreases or
increases the Common Stock during such period.

     

    (e)           "Average Market Price" means,
for any given date, the lower of (i) the arithmetic average of the Weighted
Average Price of the Common Stock during the thirty (30) consecutive Trading Day
period ending on the Trading Day immediately prior to such given date (the
"Calculation Period") or (ii) the arithmetic average of the three (3) lowest
Weighted Average Prices of the Common Stock over such Calculation Period, as
appropriately adjusted for any stock split, stock dividend, stock combination or
other similar transaction that proportionately decreases or increases the Common
Stock during such period.

     

    (f)           "Bloomberg" means Bloomberg
Financial Markets.

     

    (g)           "Business Day" means any day
other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (h)           "Calendar Quarter" means each
of: the period beginning on and including January 1 and ending on and including
March 31; the period beginning on and including April 1 and ending on and
including June 30; the period beginning on and including July 1 and ending on
and including September 30; and the period beginning on and including October 1
and ending on and including December 31.

     

    (i)           "Change of Control" means any
Fundamental Transaction other than (i) any reorganization, recapitalization or
reclassification of the Common Stock or business combination in which the
Company is the publicly traded surviving entity in which holders of the
Company's voting power immediately prior to such reorganization,
recapitalization or reclassification or business combination continue after such
reorganization, recapitalization or reclassification or business combination to
hold publicly traded securities and, directly or indirectly, the voting power of
the surviving entity or entities necessary to elect a majority of the members of
the board of directors (or their equivalent if other than a corporation) of such
entity or entities (except where Apollo Resources International or its
affiliates becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 70% or greater of the aggregate Voting
Stock of the Company), or (ii) pursuant to a migratory merger effected solely
for the purpose of changing the jurisdiction of incorporation of the
Company.

     

    (j)           "Change of Control
Consideration" means, for any Change of Control, an amount, if any, equal
to the sum of the aggregate cash consideration and the aggregate cash value of
any marketable securities per share of Common Stock to be paid to the holders of
the Common Stock upon consummation of such Change of Control, with any such
non-cash consideration to be valued at the higher of the Closing Sale Price of
such securities as of the Trading Day immediately prior to the consummation of
the Change of Control, the Closing Sale Price on the Trading Day immediately
following the public announcement of such proposed Change of Control and the
Closing Sale Price of on the Trading Day immediately prior to the public
announcement of such proposed Change of Control.

     

    (k)           "Change of Control Redemption
Premium" means 125%.

     

    (l)           "Closing Bid Price" and "Closing Sale Price" means, for
any security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade price, respectively, is reported for such security by
Bloomberg, the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the "pink sheets" by Pink
Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the
Closing Bid Price or the Closing Sale Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Bid

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Price or
the Closing Sale Price, as the case may be, of such security on such date shall
be the fair market value as mutually determined by the Company and the
Holder.  If the Company and the Holder are unable to agree upon the
fair market value of such security, then such dispute shall be resolved pursuant
to Section 26.  All such determinations to be appropriately adjusted
for any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.

     

    (m)           "Closing Date" shall have the
meaning set forth in the Securities Purchase Agreement, which date is the date
the Company initially issued Notes pursuant to the terms of the Securities
Purchase Agreement.

     

    (n)           "Contingent Obligation" means,
as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any Indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto.

     

    (o)           "Convertible Securities" means
any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for Common Stock.

     

    (p)           "Eligible Market" means the
Principal Market, The New York Stock Exchange, Inc., the American Stock
Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market or The
NASDAQ Capital Market.

     

    (q)           "Equity Conditions" means that
each of the following conditions is satisfied:  (i) on each day during
the period beginning three (3) months prior to the applicable date of
determination and ending on and including the applicable date of determination
(the "Equity Conditions
Measuring Period"), all shares of Common Stock issuable upon conversion
of the 2008 Amendment Notes shall be eligible for sale without restriction and
without the need for registration under any applicable federal or state
securities laws; (ii) on each day during the Equity Conditions Measuring Period,
the Common Stock and the PNG Shares is designated for quotation on the Principal
Market or any other Eligible Market and shall not have been suspended from
trading on such exchange or market (other than suspensions of not more than two
(2) days and occurring prior to the applicable date of determination due to
business announcements by the Company) nor shall delisting or suspension by such
exchange or market been threatened or pending either (A) in writing by such
exchange or market or (B) by falling below the then effective minimum listing
maintenance requirements of such exchange or market; (iii) during the Equity
Conditions Measuring Period, the Company shall have delivered Conversion Shares
upon conversion of the 2008 Amendment Notes to the holders on a timely basis as
set forth in Section 3(c)(ii) hereof (and analogous provisions under the Other
Notes); (iv) any applicable shares of Common Stock and PNG Shares to be issued
in connection with the event requiring determination may be issued in full
without violating Section 3(d) hereof and the rules or regulations of any
applicable Eligible Market; (v) for the two (2) Calendar Quarters immediately
preceding the applicable date of determination, the Company shall not have
failed

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    to timely
make any payments within five (5) Business Days of when such payment is due
pursuant to any Transaction Document; (vi) during the Equity Conditions
Measuring Period, there shall not have occurred either (A) the public
announcement of a pending, proposed or intended Fundamental Transaction which
has not been abandoned, terminated or consummated, or (B) an Event of Default or
(C) an event that with the passage of time or giving of notice would constitute
an Event of Default; (vii) the Company shall have no knowledge of any fact that
would cause any shares of Common Stock issuable upon conversion of the 2008
Amendment Notes not to be eligible for sale without restriction pursuant to Rule
144(k) and any applicable state securities laws; and (viii) during the six (6)
month period ending on and including the date immediately preceding the
applicable date of determination, the Company otherwise shall have been in
material compliance with and shall not have materially breached any provision,
covenant, representation or warranty of any Transaction Document.

     

    (r)           "Equity Conditions Failure"
means that (i) on any day during the period commencing ten (10) Trading Days
prior to the applicable Conversion Date through the applicable Share Delivery
Date, (ii) on any day during the period commencing ten (10) Trading Days prior
to the applicable Holder Optional Conversion/Redemption Notice Date through the
applicable Optional Conversion/Redemption Date, or (iii) on any day during the
period commencing ten (10) Trading Days prior to the applicable Mandatory
Prepayment Notice Date through the applicable Mandatory Prepayment Date, the
Equity Conditions have not been satisfied (or waived in writing by the
Holder).

     

    (s)           "Equity Value Redemption
Premium" means 125%.

     

    (t)           "Excluded Securities" means any
Common Stock issued or issuable: (i) in connection with any Approved Stock Plan;
(ii) upon conversion, adjustment or redemption of the 2008 Amendment Notes;
(iii) pursuant to a bona fide firm commitment underwritten public offering with
a nationally recognized underwriter which generates gross proceeds to the
Company in excess of $50,000,000 (other than an "at-the-market offering" as
defined in Rule 415(a)(4) under the 1933 Act and "equity lines"); (iv) in
connection with any acquisition by the Company, whether through an acquisition
of stock or a merger of any business, assets or technologies the primary purpose
of which is not to raise equity capital; (v) in connection with any other
strategic transaction or alliance the primary purpose of which is not to raise
equity capital including without limitation, the issuance of no more than
10,000,000 shares of Common Stock to agricultural conglomerates and (vii) upon
conversion or exercise of any Options or Convertible Securities which are
outstanding on the day immediately preceding the Issuance Date, provided that
the conversion or exercise price of such Options or Convertible Securities is
not amended, modified or changed on or after the Issuance Date.

     

    (u)           "Fiscal Quarter" means each of the fiscal
quarters adopted by the Company for financial reporting purposes that correspond
to the Company's fiscal year that ends on December 31, or such other fiscal
quarter adopted by the Company for financial reporting purposes in accordance
with GAAP.

     

    (v)           "Fundamental Transaction" means
that (A) the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Person or Persons, or (ii)
sell,

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) allow another
Person to make a purchase, tender or exchange offer that is accepted by the
holders of more than 50% of the outstanding shares of Voting Stock (not
including any shares of Voting Stock held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of the
outstanding shares of Voting Stock (not including any shares of Voting Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), or (v) reorganize, recapitalize or
reclassify its Common Stock, or (B) any "person" or "group" (as these terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act) (other than
Apollo Resources International) is or shall become the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of
the aggregate Voting Stock of the Company, or (C) Apollo Resources International
ceases to be the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of at least 50% of the aggregate Voting Stock of
the Company, or (D) Apollo Resources International or its affiliates becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 70% or greater of the aggregate Voting Stock of the
Company.

     

    (w)           "GAAP" means United States
generally accepted accounting principles, consistently applied.

     

    (x)           "Holder Pro Rata Percentage"
means a fraction (i) the numerator of which is the Principal amount of this Note
on the Amendment Date and (ii) the denominator of which is the aggregate
principal amount of all 2008 Amendment Notes issued pursuant to the Amendment
and Exchange Agreements on the Amendment Date.

     

    (y)           "Indebtedness" of any Person
means, without duplication (i) all indebtedness for borrowed money, (ii) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services, including (without limitation) "capital leases" in
accordance with GAAP (other than trade payables entered into in the ordinary
course of business), (iii) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (iv) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (v) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (vi) all monetary obligations under any
leasing or similar arrangement which, in connection with GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease, (vii)
all indebtedness referred to in clauses (i) through (vi) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    assumed
or become liable for the payment of such indebtedness, and (viii) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (i) through (vii) above.

     

    (z)           "Interest Exchange Conversion
Price" means, for any Exchange Date, that price which shall be the lower
of (i) the applicable Exchange Price and (ii) that price which shall be computed
as 80% of the of Average Market Price as of the applicable Exchange Date (such
period, an "Interest Exchange
Conversion Measuring Period").  All such determinations to be
appropriately adjusted for any stock split, stock dividend, stock combination or
other similar transaction during such Interest Exchange Conversion Measuring
Period.

     

    (aa)           "Interest Increase" means an
amount equal to the amount of Interest accruing on 153.85% of the Original
Principal Amount from the Amendment Date through the Redemption Expiration
Date.

     

    (bb)           "Interest Rate" means, ten percent (10%)
per annum, subject to adjustment as set forth in Section 2 hereof.

     

    (cc)           "LNG Convertible Securities"
means any stock or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for PNG Shares.

     

    (dd)           "LNG Excluded Securities" means
any PNG Shares issued or issuable: (i) in connection with any employee benefit
plan which has been approved by the Board of Directors of LNG, pursuant to which
securities of LNG may be issued to any employee, consultant, officer or director
for services provided to LNG; (ii) upon exchange of the 2008 Amendment Notes;
(iii) pursuant to a bona fide firm commitment underwritten public offering with
a nationally recognized underwriter which generates gross proceeds to LNG in
excess of $50,000,000 (other than an "at-the-market offering" as defined in Rule
415(a)(4) under the 1933 Act and "equity lines"); (iv) in connection with any
acquisition by the LNG, whether through an acquisition of stock or a merger of
any business, assets or technologies the primary purpose of which is not to
raise equity capital; (v) in connection with any other strategic transaction or
alliance the primary purpose of which is not to raise equity capital including
without limitation, the issuance of no more than 10,000,000 shares of PNG Shares
to agricultural conglomerates; (vi) to consultants and vendors of LNG, the
primary purpose of which is not to raise equity capital, in an aggregate amount
not to exceed 150,000 PNG Shares ( as adjusted for any stock split, stock
dividend, stock combination or other similar transaction after the Amendment
Date) and (vii) upon conversion or exercise of any LNG Options or LNG
Convertible Securities which are outstanding on the day immediately preceding
the Amendment Date, provided that the conversion or exercise price of such LNG
Options or LNG Convertible Securities is not amended, modified or changed on or
after the Amendment Date.

     

    (ee)           "LNG Options" means any rights,
warrants or options to subscribe for or purchase shares of PNG Shares or
Convertible Securities.

     

    (ff)           "LTM Consolidated EBITDA"
means, with respect to any Person, the aggregate Consolidated Net Income of such
Person and its Subsidiaries for the

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    current
Fiscal Quarter and the immediately preceding three (3) Fiscal Quarters but only
if and as set forth in the financial statements of the Company contained in the
Form 10-QB or Form 10-K of the Company; plus without
duplication, the sum of the following amounts of such Person and its
Subsidiaries for such period and to the extent deducted in determining
Consolidated Net Income of such Person for such period:  (i)
Consolidated Net Interest Expense, (ii) income tax expense, (iii) depreciation
expense, and (iv) amortization expense.

     

    (gg)           "Mandatory Prepayment Amount"
means upon the receipt of any Net Cash Proceeds from the consummation of any
Mandatory Prepayment Event, 100% of such Net Cash Proceeds until the Principal
amount under this Note has been paid in full.

     

    (hh)           "Mandatory Prepayment Event"
means the sale, lease, transfer, assignment, financing or other disposition of
any Production Facility (as defined in the Amendment and Exchange Agreements),
except as approved in writing by the Required Holders.

     

    (ii)           "Net Cash Proceeds" means, the
aggregate cash proceeds received by the Company or any of its Subsidiaries in
respect of the applicable Mandatory Prepayment Event (including, without
limitation, any cash received or receivable upon the sale or other disposition
of any non-cash consideration received in such Mandatory Prepayment Event) net
of the direct costs relating to such Mandatory Prepayment Event, including,
legal, accounting, printing, filing and investment banking fees incurred as a
result of the applicable Mandatory Prepayment Event.

     

    (jj)           "Optional Conversion Price"
means, the lower of (i) the applicable Conversion Price and (ii) that price
which shall be computed as 50% of the lower of (A) the arithmetic average of the
Weighted Average Prices of the Common Stock during the thirty (30) Trading Days
ending on the Trading Day immediately prior to the applicable Optional
Conversion/Redemption Date (each such period, an "Optional Conversion/Redemption
Measuring Period") or (B) the arithmetic average of the three (3) lowest
Weighted Average Prices of the Common Stock during the Optional
Conversion/Redemption Measuring Period.  All such determinations are
to be appropriately adjusted for any share dividend, share split, share
combination, reclassification or similar transaction that proportionately
decreases or increases the Common Shares during the applicable such Optional
Conversion/Redemption Measuring Period.

     

    (kk)           "Options" means any rights,
warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.

     

    (ll)           "Parent Entity" of a Person
means an entity that, directly or indirectly, controls the applicable Person and
whose common stock or equivalent equity security is quoted or listed on an
Eligible Market, or, if there is more than one such Person or Parent Entity, the
Person or Parent Entity with the largest public market capitalization as of the
date of consummation of the Fundamental Transaction.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (mm)                      "Permitted Indebtedness" means
(i) Indebtedness of the Company that is expressly subordinate in right of
payment to the Indebtedness evidenced by this Note, as reflected in a written
agreement acceptable to the Required Holders and approved by the Required
Holders in writing, and which Indebtedness does not provide at any time for (A)
the payment, prepayment, repayment, repurchase or defeasance, directly or
indirectly, of any principal or premium, if any, thereon until ninety-one (91)
days after the Maturity Date or later and (B) total interest and fees at a rate
in excess of the initial Interest Rate per annum; (ii) Indebtedness of any
Subsidiary that is non-recourse to the Company or any other Subsidiary; (iii)
Indebtedness incurred in connection with the build up of a Shell terminal which
Indebtedness shall not exceed twenty percent (20.0%) of the total cost of such
build up project and which Indebtedness may only be secured by such Shell
terminal being financed; (iv) Indebtedness represented by that certain municipal
bond financing for the Company's facility in Bell Chase, Louisiana which
Indebtedness shall be non-recourse to the Company; and (v) the Indebtedness
evidenced by the 2008 Amendment Notes.

     

    (nn)           "Permitted Liens" means (i) any
Lien for taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of
business by operation of law with respect to a liability that is not yet due or
delinquent, (iii) any Lien created by operation of law, such as materialmen's
liens, mechanics' liens and other similar liens, arising in the ordinary course
of business with respect to a liability that is not yet due or delinquent or
that are being contested in good faith by appropriate proceedings, (v) Liens (A)
upon or in any equipment (as defined in the Security Agreement) acquired or held
by the Company or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition or lease of such equipment, or (B) existing on such equipment at the
time of its acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds of such
equipment, (v) Liens on Permitted Indebtedness of the type described in clauses
(iii) and (iv) of the definition thereof; (vi) Liens incurred in connection with
the extension, renewal or refinancing of the indebtedness secured by Liens of
the type described in clauses (i) and (v) above, provided that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the Indebtedness being extended,
renewed or refinanced does not increase, (vii) leases or subleases and licenses
and sublicenses granted to others in the ordinary course of the Company's
business, not interfering in any material respect with the business of the
Company and its Subsidiaries taken as a whole, (viii) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payments of
custom duties in connection with the importation of goods, and (ix) Liens
arising from judgments, decrees or attachments in circumstances not constituting
an Event of Default under Section 5(a)(viii).

     

    (oo)           "Permitted Senior Indebtedness"
means Indebtedness not to exceed $10,000,000 in the aggregate outstanding at any
time pursuant to (i) the Amended and Restated Credit Agreement dated as of June
25, 2008 among Durant Biofuels, LLC, as Borrower, Earth Biofuels, Inc. as Loan
Party, the Financial Institutions Party thereto, as Lenders, and Fourth Third
LLC. and (ii) the Amended and Restated Credit Agreement dated as of June 25,
2008 among EARTH LNG, INC., as Borrower, PNG Ventures, Inc., as Parent and a
Loan Party and Applied LNG Technologies USA, L.L.C., Fleet Star, Inc., Apollo
Leasing, Inc., Arizona

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    LNG,
L.L.C., as additional Loan Parties, the Financial Institutions Party thereto, as
Lenders, and Fourth Third LLC, as Agent and Sole Lead Arranger.

     

    (pp)           "Person" means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

     

    (qq)           "Principal Market" means the
OTC Bulletin Board.

     

    (rr)           "Redemption Date" means, (i)
with respect to any Liquidating Conversion/Redemption Amount, the Optional
Conversion/Redemption Date, (ii) with respect to any Optional Redemption Amount,
the Optional Redemption Date, (iii) with respect to any Company Optional
Redemption Price, the Company Optional Redemption Date, (iv) with respect to any
Mandatory Redemption Price, the Mandatory Redemption/Conversion Date and (v)
with respect to any Mandatory Prepayment, the Mandatory Prepayment
Date.

     

    (ss)           "Redemption Premium" means (i)
in the case of the Events of Default described in Section 5(a)(i) - (v) and
(viii) - (xvii), 125%  or (ii) in the case of
the Events of Default described in Section 5(a)(vi) - (vii), 100%.

     

    (tt)           "Redemption Prices" means,
collectively, the Event of Default Redemption Price, the Change of Control
Redemption Price, the Optional Redemption Price, and the Company Optional
Redemption Price, each of the foregoing, individually, a Redemption
Price.

     

    (uu)           "Required Holders" means (i)
two (2) or more unaffiliated holders of Notes representing at least a majority
of the aggregate principal amount of the Notes then outstanding or (ii) holders
of Notes representing at least 92.5% of the aggregate principal amount of the
Notes then outstanding.

     

    (vv)           "Reserved Amount" means, as of
any date of determination, an amount equal to 35% of the aggregate Principal
amount outstanding under all of the Notes.

     

    (ww)                      "SEC" means the United States
Securities and Exchange Commission.

     

    (xx)           "Securities Purchase Agreement"
means that certain securities purchase agreement dated as of the July 24, 2006
by and among the Company and the initial holders of the Notes, as amended by the
Amendment and Exchange Agreements.

     

    (yy)           "Successor Entity" means the
Person, which may be the Company, formed by, resulting from or surviving any
Fundamental Transaction or the Person with which such Fundamental Transaction
shall have been made, provided that if such Person is not a publicly traded
entity whose common stock or equivalent equity security is quoted or listed for
trading on an Eligible Market, Successor Entity shall mean such Person's Parent
Entity.

     

    (zz)           "Trading Day" means any day on
which the Common Stock is traded on the Principal Market, or, if the Principal
Market is not the principal trading market for

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    the
Common Stock, then on the principal securities exchange or securities market on
which the Common Stock is then traded; provided that "Trading Day" shall not
include any day on which the Common Stock is scheduled to trade on such exchange
or market for less than 4.5 hours or any day that the Common Stock is suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m.,
New York Time).

     

    (aaa)                      "Transaction Documents" means
all Existing Transaction Documents (as defined in the Amendment and Exchange
Agreements), as amended by the Amendment and Exchange Agreements.

     

    (bbb)                      "Voting Stock" of a Person
means capital stock of such Person of the class or classes pursuant to which the
holders thereof have the general voting power to elect, or the general power to
appoint, at least a majority of the board of directors, managers or trustees of
such Person (irrespective of whether or not at the time capital stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency).

     

    (ccc)                      "Weighted Average Price" means,
for any security as of any date, the dollar volume-weighted average price for
such security on the Principal Market during the period beginning at 9:30:01
a.m., New York Time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New York
Time (or such other time as the Principal Market publicly announces is the
official close of trading) as reported by Bloomberg through its "Volume at
Price" functions, or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at
9:30:01 a.m., New York Time (or such other time as such market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New York
Time (or such other time as such market publicly announces is the official close
of trading) as reported by Bloomberg, or, if no dollar volume-weighted average
price is reported for such security by Bloomberg for such hours, the average of
the highest closing bid price and the lowest closing ask price of any of the
market makers for such security as reported in the "pink sheets" by Pink Sheets
LLC (formerly the National Quotation Bureau, Inc.).  If the Weighted
Average Price cannot be calculated for a security on a particular date on any of
the foregoing bases, the Weighted Average Price of such security on such date
shall be the fair market value as mutually determined by the Company and the
Required Holders.  If the Company and the Required Holders are unable
to agree upon the fair market value of such security, then such dispute shall be
resolved pursuant to Section 26.  All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.

     

    (32)           DISCLOSURE. Upon
receipt or delivery by the Company of any notice in accordance with the terms of
this Note, unless the Company has in good faith determined that the matters
relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries, the Company shall within two (2)
Business Days after any such receipt or delivery publicly disclose such
material, nonpublic information on a Current Report on Form 8-K or
otherwise.  In the event that the Company believes that a notice
contains material, nonpublic information relating to the Company or its
Subsidiaries, the Company so shall indicate

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    to such
Holder contemporaneously with delivery of such notice, and in the absence of any
such indication, the Holder shall be allowed to presume that all matters
relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries.  In the event of a breach
of the foregoing covenant by the Company, any of its Subsidiaries, or any of its
or their respective officers, directors, employees and agents, in addition to
any other remedy provided herein or in the Transaction Documents, a Holder shall
have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material, nonpublic information
without the prior approval by the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees or agents.  No Holder
shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, stockholders or agents for any
such disclosure.

     

    [Signature
Page Follows]

     

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    IN
WITNESS WHEREOF, the Company has caused this Amended and Restated Senior Secured
Exchangeable Convertible Note to be duly executed as of the Amendment Date set
out above.

     

    


    
      	
              Earth
      Biofuels, Inc.

            
	
              By:                                                                

            
	
              Name:

            
	
              Title:

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


        
          EXHIBIT
I

           

          


           

          EARTH
BIOFUELS, INC.

           

          CONVERSION
NOTICE

           

        

      

    


    Reference
is made to the Amended and Restated Senior Secured Exchangeable Convertible Note
(the "Note") issued to
the undersigned by Earth Biofuels, Inc. (the "Company").  In
accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note indicated
below into shares of Common Stock par value $0.001 per share (the "Common Stock") of the Company,
as of the date specified below.

     

    
      	
              Date
      of Conversion:

            	 
      
	
              Aggregate
      Conversion Amount to be converted:

            	 
      
	
              Please
      confirm the following information:

            
	
              Conversion
      Price:

            	 
      
	
              Number
      of shares of Common Stock to be issued:

            	 
      
	
              Notwithstanding
      anything to the contrary contained herein, this Conversion Notice shall
      constitute a representation by the Holder of the Note submitting this
      Conversion Notice that, after giving effect to the conversion provided for
      in this Conversion Notice, such Holder (together with its affiliates) will
      not have beneficial ownership (together with the beneficial ownership of
      such Person's affiliates) of a number of Common Shares which exceeds the
      Maximum Percentage of the total outstanding Common Shares as determined
      pursuant to the provisions of Section 3(d)(i) of this
  Note.

            
	
              Please
      issue the Common Stock into which the Note is being converted in the
      following name and to the following address:

            
	
              Issue
      to:

            	 
      
	 
      	 
      
	 
      	 
      
	
              Facsimile
      Number:

            	 
      
	
              Authorization:

            	 
      
	
              By:

            	 
      
	
              Title:

            	 
      
	
              Dated:

            	 
      
	
              Account
      Number:

            	 
      
	
                (if
      electronic book entry transfer)

            	 
      
	
              Transaction
      Code Number:

            	 
      
	
                (if
      electronic book entry transfer)

            	 
      


    


    
      
         


      

      
         


        
          

        

      

      
         


        
          EXHIBIT
II

           

          


           

          EARTH
BIOFUELS, INC.

           

          EXCHANGE
NOTICE

           

        

      

    


    Reference
is made to the Amended and Restated Senior Secured Exchangeable Convertible Note
(the "Note") issued to
the undersigned by Earth Biofuels, Inc. (the "Company").  In
accordance with and pursuant to the Note, the undersigned hereby elects to
exchange the Exchange Amount (as defined in the Note) of the Note indicated
below into shares of PNG Shares (as defined in the Note).

     

    
      	
              Date
      of Exchange:

            	 
      
	
              Aggregate
      Exchange Amount to be exchanged:

            	 
      
	
              Please
      confirm the following information:

            
	
              Exchange
      Price:

            	 
      
	
              Number
      of shares of PNG Shares to be issued:

            	 
      
	
              Notwithstanding
      anything to the contrary contained herein, if the Holder is subject to
      Section 4(d) of the Note, this Exchange Notice shall constitute a
      representation by the Holder of the Note submitting this Exchange Notice
      that, after giving effect to the exchange provided for in this Exchange
      Notice, such Holder (together with its affiliates) will not have
      beneficial ownership (together with the beneficial ownership of such
      Person's affiliates) of a number of PNG Shares which exceeds the Maximum
      Percentage of the total outstanding PNG Shares as determined pursuant to
      the provisions of Section 4(d)(i) of the Note.

            
	
              Please
      issue the PNG Shares into which the Note is being exchanged in the
      following name and to the following address:

            
	
              Issue
      to:

            	 
      
	 
      	 
      
	 
      	 
      
	
              Facsimile
      Number:

            	 
      
	
              Authorization:

            	 
      
	
              By:

            	 
      
	
              Title:

            	 
      
	
              Dated:

            	 
      
	
              Account
      Number:

            	 
      
	
                (if
      electronic book entry transfer)

            	 
      
	
              Transaction
      Code Number:

            	 
      
	
                (if
      electronic book entry transfer)

            	 
      


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ACKNOWLEDGMENT

     

    The
Company hereby acknowledges this Conversion Notice and hereby directs Nevada
Agency and Trust Company to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated June __, 2008
from the Company and acknowledged and agreed to by Nevada Agency and Trust
Company.

     

    


    
      	
              EARTH
      BIOFUELS, INC.

            
	
              By:                                                                

            
	
              Name:

            
	
              Title: